Kodak files for bankruptcy
The company says it has new financing and can continue operating while it restructures.
The stock has been delisted from the New York Stock Exchange. Its shares were falling in over-the-counter trading Thursday under the new symbol EKDKQ.
The 131-year-old company had been trying desperately to sell its huge collection of digital-imaging patents, saying it needed the money to survive. The company's future essentially hinged on that sale. If it didn't come through -- and it looks like it didn't -- bankruptcy was all but assured.
Kodak will now reorganize its business in hopes of bolstering its liquidity and settling some longstanding liabilities. The company wants to focus on its most valuable business lines and expects to complete the restructuring in 2013. About 75% of its revenue last year was from its digital businesses.
Kodak says it has enough money to keep operating during the bankruptcy and emphasizes that it will continue offering products and services. Employees will still be paid. The company has obtained $950 million in financing from Citigroup (C) with an 18-month maturity date.
One of Kodak's biggest problems was that it held stubbornly to its legacy film businesses and waited too long to embrace digital technology. The company has finally come around, and it wants to continue that digital push. It has begun closing manufacturing plants and film processing labs, finally saying goodbye to the traditional operations that were no longer profitable.
After trying unsuccessfully to profit from digital cameras and online photo-sharing tools like EasyShare, Kodak now sees its future in the printer business, both in home photo printers and commercial high-speed presses. Kodak is pouring money into the business in hopes of making it successful. Its digital-imaging unit lost $90 million in the third quarter.
It sounds like the company will continue to push into printers. "Kodak is taking a significant step toward enabling our enterprise to complete its transformation," CEO Antonio Perez said.
He added that bankruptcy offers the best way to maximize the value of two assets in particular: the company's digital-capture patents, which still bring in significant licensing revenue, and its printing and deposition technologies.
Kodak shares were above $5 just a year ago. But investors lost faith as uncertainty continued to hover over the company. Could Kodak find a way to profit in the digital age? What happens as smartphone cameras increasingly replace traditional ones? Could Kodak beat back the threats from Apple (AAPL), Microsoft (MSFT), Google (GOOG) and others making headway into digital images? (Microsoft owns and publishes Top Stocks, an MSN Money site.)
As rumors of bankruptcy surfaced, shares fell below $1. But recently investors had been more optimistic. Tuesday, the stock rose 4.5% to 55 cents and 6.4% in after-hours trading.
Common shareholders will likely lose the value of their shares in bankruptcy.
Kodak was born when George Eastman, a high school dropout who worked to help his struggling family, became absorbed in photography in the late 19th century. He experimented with gelatin emulsions for three years, inventing a formula for dry-plate photography and a machine that could prepare large numbers of plates, the company said.
Eastman set out to make photography easy for everyday users. He devised new coatings for photography paper. He came up with ways to roll paper film in a holder. He coined the name Kodak and trademarked it in 1888.
The innovations continued. The debut of Kodachrome film in 1935 changed the industry. By 1988, the company employed nearly 150,000 people. Kodak became an industrial giant, and its stock was a reliable winner for decades.
I wish them all the luck...
Was a good AMERICAN company for years, and provided
jobs for thousands of Americans
Shame on Kodak for allowing themselves to get in this position. Eastman had vision and most definitely he would have have pioneered and led the digital age transformation, his successors lacked that ability and survived just by living off of the name while the market was changing around them. Kodak printers are low quality and their easy share software tool is so awful I uninstalled it after one day of installing it when it came with my digital camera purchase. I hope they clean house along with the reorganization and put some leaders in there who have a vision. I don't honestly see them being a significant printer player and besides that market is already saturated.
I don't know what it is about Rochester NY. We have all these Fortune 500 companies start here and then they leave or go belly up. (Kodak, Xerox, Champion Products, Gannett Newsgroup, Baush and Lomb. I could go on and on.)
GM seems to be turning themselves around, maybe Kodak can too. But I'm afraid they have been too slow and made too many mistakes. Who knows?
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The company plans to close stores and lay off employees, and says it needs to make some deeper changes.
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