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Wed August 21, 2013
Kodak Reinvents Itself As Judge Approves Bankruptcy Exit
Originally published on Thu August 22, 2013 10:54 am
U.S. Bankruptcy Judge Allan Gropper has approved Kodak's plan to emerge from court oversight. That paves the way for it to be a much smaller company focused on commercial and packaging printing.
The plan received the judge's approval on Tuesday, and the company hopes to put it into effect as soon as Sept. 3, reports Kate O'Connell of member station WXXI in Rochester, N.Y.
Most of the old Kodak is gone, including the camera-making business. It was unable to keep up with the switch from film to digital technology.
These days, attention seems to be focused on cellphone cameras.
Kodak filed for bankruptcy protection last year after struggling with increasing competition and growing debt.
Since its filing, Kodak has sold off many of its businesses and patents while shutting down the camera manufacturing unit that first made it famous.
George Conboy, an analyst with Brighton Securities, tells NPR's Laura Sydell that the company's business plan submitted to the court does not include consumer photos.
"What Kodak makes now is equipment that will allow you to print labels that might go on, say, a juice bottle or something like that," he says.
In 2003, Kodak's revenue was more than $13 billion, but by 2011, it was down to $6 billion.
The court-approved plan affects creditors, retirees and shareholders.
"Existing stock would all be canceled out, and a whole new generation of shareholders, primarily a number of large financial institutions, would be the new owners of Kodak," says reporter Matt Daneman of the Democrat and Chronicle in Rochester.
Gropper says creditors will get about 4 cents on the dollar. Many former workers will lose retirement and health care benefits.
Kodak once employed 65,000 people in Rochester. Its new business will employ about 2,000 people.
The Associated Press reports that the U.S. Trustee filed an objection with the court challenging the legality of hefty cash and stock bonuses that Kodak executives are expected to receive when the company exits from bankruptcy protection.
DAVID GREENE, HOST:
And here's some other news in a snapshot. Kodak has gotten permission to emerge from bankruptcy. But as NPR's Laura Sydell reports, the company that once dominated the film and instant photo business is going to look very different.
LAURA SYDELL, BYLINE: For anyone who grew up before digital cameras, saying Kodak moment was shorthand for a sappy home photo. TV was filled with commercials like this one, of families going to weddings and graduations and taking pictures of it.
(SOUNDBITE OF KODAK AD)
UNIDENTIFIED MAN: Kodak film, for the times of your life.
SYDELL: But Kodak was never able to get an edge in the digital photo business. The home photo market became all about cell phone cameras.
In 2003, Kodak's revenue was over 13 billion. By 2011, it was down to 6 billion. And last year, Kodak declared bankruptcy.
GEORGE CONBOY: It's astonishing that that kind of resonance with consumers could practically evaporate in so brief a time.
SYDELL: George Conboy, an analyst with Brighton Securities, says Kodak was given permission to emerge from bankruptcy with a plan that doesn't really include consumer photos.
CONBOY: What Kodak makes now is equipment that will allow you to print labels that might go on, say, a juice bottle or something like that.
SYDELL: Kodak once employed 65,000 people in Rochester, New York. Its new business will employ about 2,000 people.
The upside, says Conboy, is that the death of the old business took so long that most of its skilled employees were able to find new jobs in the area.
Laura Sydell, NPR News. Transcript provided by NPR, Copyright NPR.