* Kodak legacy spans 13 decades
* Company began to fade in 2003
* Digital cameras replace need for film
By Franklin Paul
NEW YORK, Sept 30 Its legacy spans 13 decades,
and boasts many American firsts, but Eastman Kodak EK.N, best
known for cameras and photography, maybe running out of options
Concerns about the company's future boiled over on Friday,
after it hired a law firm well-known for bankruptcy cases,
sending its shares down 54 percent to 78 cents per share.
Although Kodak said it has "no intention" of filing for
bankruptcy, the fact that its shares closed under $1, and
market capitalization shrank to less than $300 million suggests
that even the most die-hard investors may have lost faith.
The picture began to fade in September 2003. Film sales
were dying, and Kodak slashed its dividend by 70 percent,
hoping to gain flexibility as it beefed up spending on
commercial and inkjet printers, medical imaging devices and
other digital systems. It stopped investing in traditional
The next year, billionaire financier Carl Icahn ended a
brief, but profitable stint as a Kodak shareholder, saying that
the company's business model would not work, especially since
it needed to shift gears while its primary revenue source,
film, was in decline.
"(What Kodak is doing) certainly might not be enough," he
said. "I think it is possibly too late."
In January 2004, the company said it would trim costs by
shrinking manufacturing, and cutting some 15,000 jobs, or about
20 percent of its work force, over three years. Its work force
has since been pared to about 18,800 -- 9,600 in the United
States -- at the end of 2010, down from 86,000 in 1998.
Kodak has been an iconic name in American business. The
company's history stretches back to inventor George Eastman's
Eastman Dry Plate Company in 1881. By 1885 he had introduced
the the first transparent photographic film. The "Kodak" camera
hit the market in 1888, with the slogan, "You press the button
- we do the rest."
It rolled out Kodachrome, the first commercially successful
amateur color film, in 1935, but George Eastman was unable to
see its debut. The ailing Eastman, a pioneering inventor and
prolific philanthropist, committed suicide in 1932.
Nearly a century later -- 1981 -- its sales topped $10
billion. It even got in early to the digital camera movement,
with its Professional Digital Camera System in 1991 that
enabled photojournalists to take an electronic picture with a
camera equipped with Kodak's 1.3 megapixel sensor.
Daniel Carp took over as CEO in 2000, right around the time
that digital cameras started to become an affordable
alternative to film cameras. Taking pictures without the use
of film and the option to forgo printing proved a crippling
blow to the company, which sold film, photo paper, and the
systems that develop film into prints.
Veteran Hewlett Packard executive Antonio Perez joined the
company in 2003, and became CEO two years later. Perez was
instrumental in Kodak's shift to digital devices and services,
hoping to outpace plummeting demand for film.
But some say that was already too late, since consumers had
become enamored with the ease of digital cameras, which allowed
then to snap hundreds of photos without film or the need to
Today, most snapshots are taken with phones and viewed on
Facebook, and its tough to remember when Kodak's brand was
stronger than that of the social media site. Most iPhone-toting
teens have never purchased a roll of film, and have no interest
in carting around a stand-alone camera.
In recent years the company has relied on licensing of
patents related to photography and printing, as well as sales
of commercial and consumer printing systems. In July, Perez
said Kodak would sell part of its patent portfolio, which is
estimated to be worth more than $2 billion in its entirety.
A dearth of news about the patent sale has contributed to
the stock's weakness. The fact that no sale has been announced,
shows that the patent's values are a fraction of Kodak's hopes,
according to a source close to the matter.
(Additional reporting by Nadia Damouni in New York; Editing
by Bob Burgdorfer)