It’s a sad day in the world of photography as Eastman Kodak Co files for bankruptcy. The photographic icon that invented the first hand-held camera, has filed for bankruptcy protection and plans to shrink significantly.
After failing to embrace changes within their market place and create more modern technologies, the company has chosen to file for bankruptcy. This will give the company the ability to find buyers for some of their 1,100 digital patents, which works out to be a major portion of the company’s value. Kodak, which traces its roots back to 1880, currently employs 17,000 people worldwide, down from 65,000 just under 10 years ago. The company notes that if they do come back from this bankruptcy, they will be a much smaller entity.
“This is a necessary step and the right thing to do for the future of Kodak,” Chairman and Chief Executive Antonio Perez said in a statement last Thursday.
Kodak at one point dominated their industry, and in recent years Perez attempted to steer Kodak towards consumers and commercial printers. Unfortunately, the company struggled to restore annual profitability, and meet its pension and other obligations to their employees.
McCorvey, their Chief Financial Officer, said Kodak ultimately suffered from a “liquidity shortfall” as numerous vendors stopped shipping and providing services to Kodak, while others demanded shorter payment terms from the company. Due to such shortfalls, Kodak withdrew $160 million from a credit line last September, raising suspicions from many investors about cash shortages.
Perez notes that the bankruptcy would actually help the company maximize the value of their patents related to digital imaging. “I’ve talked to companies who … said they were waiting for Kodak to go bankrupt to pay a better price,” said Baruah, the Brean Murray analyst.