Moment of truth looms for ailing Kodak

THEY invented the hand- held camera and helped bring the world the first pictures from the moon — but Kodak has filed for bankruptcy protection, capping a prolonged plunge for one of the world’s best-known companies and brands.

George Eastman, a high-school dropout from upstate New York, founded Kodak in 1880, and began to make photographic plates. To get his business going, he splurged $125 on a second-hand engine.

Within eight years, the Kodak name had been trademarked, and the company had introduced the hand-held camera as well as roll-up film, where it became the dominant producer.

Eastman also introduced the “wage dividend” in which the company would pay bonuses to employees based on results.

In 1969, nearly a century after Kodak’s founding, astronaut Neil Armstrong used a Kodak camera the size of a shoebox to take pictures as he became the first man to walk on the moon.

Those pictures arguably had more viewers than the 80 films that have won Best Picture Oscars and were shot on Kodak film.

Six years after Armstrong’s walk, Kodak invented the digital camera. The size of a toaster, it was too big for the pockets of amateur photographers, whose pockets now are stuffed with digital offerings from the likes of Canon, Casio and Nikon.

But rather than develop the digital camera, Kodak put it on the back-burner and spent years watching rivals take market share that it would never reclaim.

In 1994, Kodak spun off a chemicals business, Eastman Chemical Co, which proved to be more successful.

Kodak’s final downfall in the eyes of investors began in September when it unexpectedly withdrew $160 million from a credit line, raising worries of a cash shortage. It ended September with $862m in cash.

In its bankruptcy, Kodak could try to restructure its debts, or perhaps sell all or some of its assets, including the patent portfolio.

The loan and bankruptcy protection from creditors may give Kodak the time it needs to find buyers for some of its 1,100 digital patents, the key to its remaining value, and to reshape its business while continuing to pay its 17,000 workers.

At the end of September, the group had total assets of $5.1 billion and liabilities of $6.75bn. Its market value has sunk to below $150m from $31bn 15 years ago.

In the last few years, Kodak has used extensive litigation with rivals such as Apple Inc, BlackBerry maker Research in Motion Ltd and Taiwan’s HTC Corp over its patents as a means to try to generate revenue. Those patents may now be sold through the bankruptcy process.

Kodak’s European business is not affected by the chapter 11 move.

European managing director Philip Cullimore said: “In Europe we have seen a significant shift towards business-to-business imaging applications, and are weighted towards printing. These businesses in Europe are performing well and growing fast.”

Film star

* 1883: Kodak founder George Eastman produced the first camera film in rolls.

* 1888: “Kodak” was born as a trademark. The first portable camera was introduced.

* 1898: Kodak developed the Folding Pocket Kodak Camera. The Brownie camera was introduced at $1 each and films at 15 cents per roll.

* 1923: Kodak introduced Kodacolor motion picture films, cameras and projectors.

* 1932: George Eastman, 77, took his own life. He left a note: “To my friends. My work is done. Why wait? G.E.”

* 1969: Kodak film captures the historic moments of the first moon landing.

* 1975: Kodak claims to have invented the world’s first digital camera. It had a resolution of 0.1 megapixels; the camera was the size of a toaster.