One of the world’s iconic technology companies, Kodak, has filed for bankruptcy protection in the US, a final coup-de-grace to the photographic film era.
Once dominant in the photographic industry, the inventor of the original handheld camera and the digital camera has struggled over the last 10 years to adapt its technologies to the digital era. Its film processing and camera businesses have been rendered obsolete, and CEO Antonio Perez has been redirecting the company to focus on digital copying technology, albeit unsuccessfully.
The move to file a Chapter 11 bankruptcy gives Eastman-Kodak time to reorganise without having to deal with creditors. The company says its goods and services will continue to be provided internationally as per normal, and that the company’s non-US subsidiaries are not included in the filing, and will not be under court supervision.
It currently lists its assets at $5.1 billion and debt of $6.8 billion. The company hasn’t made a profit since 2007.
Kodak Eastman obtained $950 million in debt financing from Citigroup as part of its bankruptcy filings. Perez believes the company can reorganise and return as a profitable and sustainable enterprise, noting that, despite the company’s problems in the digital era 75% of its revenue still came from digital businesses in 2011.
"At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core IP assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company," he said.
Kodak has spent the last few years controversially surviving off its patent portfolio (either through licensing or litigation), and it is understood the company had been shopping around these divisions to buyers, unsuccessfully.
"Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio: our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images and have generated over $3 billion of licensing revenues since 2003; and our breakthrough printing and deposition technologies, which give Kodak a competitive advantage in our growing digital businesses."
It is a sad fall for one of the dominant businesses of the 20th century, a company so ubiquitous the term ‘Kodak moment’ entered common lexicon. The company was started by George Eastman in 1880, and is responsible for most of the photographic innovations of the last century. In 1976 it had a 90% market share of photographic film sales in the United States, its only real competitor was Fujifilm in film processing.
The company was a victim of its own success. Kodak engineer Steve Sasson invented digital photography technology in 1975, but the company shelved the technology out of fear it would damage its lucrative film business. The original device was as big as a toaster, took 23 seconds to take a picture and only photographed in black and white.
It would take until 1991 for Kodak to release first commercially available camera, behind its rivals. The Kodak DCS-100 SLR used Nikon and Canon film camera bodies and launched with a 1.3 megapixel sensor. It cost $13,000 (£8,500). After a spate of SLR digital camera failures in the late 90s and early 2000s, the company supplied components to Canon and Nikon, but was left out in the cold when they both decided to go it alone.
The company also made the mistake in selling off Eastman Chemicals in 1994, which is now worth more than the entire Kodak empire.