* To exit camera, camcorders, digital frames
* Sees significant layoffs in 400-employee base
* Several parties interested in brand license
* Plans $30 mln charge, $100 mln savings
By Sinead Carew
Feb 9 Eastman Kodak Co, the
inventor of the digital camera, plans to get out of that
business in the first half of the year as the bankrupt company
looks to cut costs.
The decision to stop selling digital cameras along with
pocket video cameras and digital picture frames marks the end of
an era for Kodak, which also invented the handheld camera.
The company was one of the biggest corporate casualties of
the digital age as it failed to quickly embrace modern
technologies such as digital photography, which it invented in
Kodak, which filed for bankruptcy protection last month,
said on Thursday that getting out of cameras would result in
"significant" job losses. Most of the 400 people in that
business are based in Rochester, New York, and work in research
and development and marketing.
Instead of designing its own cameras, Kodak will now try to
license its brand to other camera makers, several of which have
already expressed "significant interest," said spokesman
Kodak, which as recently as 2006 was one of the top three
digital camera makers in the world, will stick with its desktop
printer business, on which it has focused more recently.
"The printer initiative took over (in the last decade), and
they took their eye off the ball in the camera and camcorder
space," said IDC analyst Christopher Chute.
The company, which began in 1880, also invented digital
cameras with Wi-Fi connections and touch-screens as well as
docking stations that made it easy to transfer photos to
computers, according to Chute.
These were among the products that gave Kodak a 10 percent
market share in 2006, behind Canon and Sony Corp
. By 2010 it had dropped to seventh place behind rivals
like Nikon and Samsung Electronics Co,
according to IDC.
But as the quality of digital cameras in cellphones
improved, stand-alone cameras' relevance became somewhat limited
to the higher-end market, where Kodak did not compete in recent
The company will take a charge of about $30 million to leave
the business. It expects the exit to generate more than $100
million in annual operating savings.
The charge does not include additional costs that Kodak
expects to incur for actions such as ending manufacturing
contracts with overseas companies that make its products,
Kodak -- which once employed more than 60,000 people -- has
not disclosed its employee numbers since the end of 2010, when
it announced that it had a work force of 18,800. Today's
employee base is smaller than that, according to Veronda, who
said the company would update the number soon.
CAMERA VS. PRINTER
Kodak came under pressure from investors because margins are
higher for products such as photography film and printer ink
cartridges, which consumers buy far more frequently than
"As a business entity, their focus was always on consumable
businesses, and rethinking how you sell (camera) hardware that
only sells every few years is a very different kind of
business," NPD analyst Stephen Baker said.
"Getting out of a market that's declining rapidly ... is
probably a good idea," said Baker who estimated that Kodak's
unit camera sales fell about 20 percent in 2011 from 2010.
Kodak said the latest decision was the "logical extension"
of its recent plan to improve margins in the camera business by
narrowing its product portfolio, geographies and retail outlets.
The company, which depends on digital technology for
three-quarters of its revenue, plans to continue to offer online
and retail photo printing, and desktop printers.
Remaining consumer services will also include retail-based
photo kiosks and dry lab systems. Kodak said it has more than
100,000 kiosks and order stations for dry lab systems around the
Besides its consumer businesses segment, Kodak has a
commercial business that includes enterprise services, graphics,
entertainment and commercial films units.
The company promised to honor all related product
warranties, and provide technical support and service for its
cameras, pocket video cameras and digital picture frames.