19 January 2012
Last updated at 10:54
Kodak’s share of the market has been eroded by competitors
Eastman Kodak, the company that invented the hand-held camera, has filed for bankruptcy protection.
The move gives the company time to reorganise itself without facing its creditors, and Kodak said that it would mean business as normal for customers.
The company has recently moved away from cameras to refocus on making printers, to stem falling profits.
The 133-year-old firm has struggled to keep up with competitors who were quicker to adapt to the digital era.
“Kodak made all its money from selling film, then the digital camera came along and now no-ones buying film. It’s not like they didn’t see it coming. Kodak hesitated because they didn’t want to eviscerate their business,” said Rupert Goodwins, editor of technology website ZDNet.
Announcing the move to seek bankruptcy protection, Antonio Perez, Kodak’s chairman and chief executive, said: “The board of directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak.”
The company said it had already arranged a $950m (£615m) credit facility from Citigroup.
Earlier this month, the New York Stock Exchange told Kodak that it could be delisted from the exchange if it could not get its stock price back above $1.00 per share.
Kodak fell out of the Dow Jones Industrial Average of 30 top US companies in 2004.
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Kodak moments
- Kodak founder George Eastman produced the first camera film in rolls in 1883
- The firm Kodak is set up in 1888 and launches the first consumer camera in 1888 with the slogan: “You press the button, we do the rest”
- In 1900 Kodak introduces a consumer camera for $1 called the Brownie, which goes on to become a best-seller in America
- In 1969 a Kodak camera is used by astronauts Buzz Aldrin and Neil Armstrong to record the first Moon landing
- In 1975 Kodak invents the world’s first digital camera with a resolution of 0.1 megapixels; the camera was the size of a toaster
Transformation
Since becoming chief executive, Mr Perez has been responsible for steering Kodak away from its traditional market in cameras to focus on home and commercial printers.
However, the firm has failed to stop its plunging profitability.
The move to seek bankruptcy protection comes after Kodak failed to sell its catalogue of digital imaging patents last year. At the time, Kodak warned that it would run out of cash if it did not find a buyer by the end of 2011.
“Now we must complete the transformation by further addressing our cost structure and effectively monetising non-core IP assets,” said Mr Perez on Thursday.
Kodak employs 19,000 workers whose jobs may be affected by the bankruptcy proceedings.
In its 1980s heyday, the company employed 145,000 people in locations throughout the world.
Reorganisation
Reaction to the news has been especially strong in North America.
“Kodak played a role in pretty much everyone’s life in the 20th Century because it was the company we entrusted our most treasured possession to – our memories,” said Robert Burley, a photography professor at Ryerson University in Toronto.
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“You could find that name inside every American household and, in the last five years, it’s disappeared. I think we all hope it won’t mean the end of Kodak because it still has a lot to offer.”
Over the past few months several directors have resigned from the board, and at the start of 2012 Kodak announced that it was reorganising its business units into two rather than three, renaming them consumer and commercial.
The firm said at the time that it was pinning its hopes on its printer, software and packaging businesses, with the aim of growing them to account for 25% of its income by 2013.
“Even though film and developing is a dead business, there is still money to be made in ink and other supplies,” technology commentator Larry Magib told BBC World.
“But Hewlett Packard, Canon and Epson have those markets. Kodak does have printers, but it has not been able to succeed in making money from them,” he said.
Although Kodak was one of the original inventors of digital photography, it failed to keep pace with developments in the market and competition from South East Asia steadily eroded its share of the market.
Since 2003, Kodak has closed down 12 manufacturing plants.
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Article source: http://www.bbc.co.uk/go/rss/int/news/-/news/business-16625725
