Re: Kodak - Chapter 11: Quiebra
Kodak to Wind Down Consumer Printers, Cut Jobs
09/28/2012 | 10:16am US/Eastern
Eastman Kodak Co. (EK) further narrowed its ambitions for what the company will look like when it emerges from bankruptcy, saying it will wind down its consumer printing business and run it for cash.
The move comes as Kodak struggles to sell a portfolio of patents aimed at raising needed funds. Kodak's future is now pinned on selling large machines to commercial printers--currently at a pace of just two dozen a year--a dramatic reduction in scale for a company that once dominated the photography market and reached into diverse markets like those for sensors and chemicals.
The decision is the second in as many months that will shrink what Kodak will look like after it exits Chapter 11. Kodak executives didn't want to sell the company's personalized imaging and document imaging businesses, but put them on the block last month, as the failure to complete the patent auction heightened the need to raise cash, a person familiar with the matter said.
The company's decisions are being driven by the need to repay more than $600 million it owes on a bankruptcy loan and finalize which businesses will emerge from Chapter 11 protection and which won't. Kodak said Friday it has more than $1 billion in cash world-wide, though much of that is overseas and can't be tapped in the U.S. immediately. The company is in the early stages of negotiating with potential financing partners that would help it emerge from bankruptcy court, a person familiar with the matter said.
Kodak said it is making good progress toward emerging from Chapter 11 next year.
On Friday, the company said it would focus on ink sales now and wind down sales of the printers. The business won't be shut down immediately, and some printers will be sold to certain customers. But the company will phase out sales of consumer printers under the Kodak name over the next year or so, a person familiar with the matter said.
The company said the move will cost it $90 million, as it lays off staff and writes down the value of its assets.
Kodak's move with consumer printers was disclosed along with a series of planned updates to a bankruptcy judge in an effort by the company to maintain control over the course of its bankruptcy proceedings. The company wants the judge to extend its so-called "exclusivity period"--during which only Kodak can propose a reorganization plan and rival proposals aren't allowed--until Feb. 28.
Chief Executive Antonio Perez, a former top Hewlett-Packard Co. (>> Hewlett-Packard Company) executive, had long planned to rebuild Kodak around the commercial and consumer printing businesses. The consumer business has been bleeding cash while Kodak spent heavily to push more printers into consumers' hands, investing for the day when it could reap the reward of selling replacement ink.
The company is still working to scale up manufacturing of the giant, room-sized Prosper Presses sold by its commercial printing business. The commercial business will also sell ink and services to its customers, but the inability to make enough printers has been an obstacle to growth, a person familiar with the matter said.
Kodak is now considering outsourcing production of the machines or creating a joint venture with companies in Asia, another person familiar with the matter said.
Meanwhile, Kodak remains locked in discussions with suitors for a trove of digital patents and hopes to reach a deal soon, said the person familiar with the matter.
Kodak is exchanging drafts of a deal for the patents with a consortium of buyers, with the hopes of closing the deal in the "relatively near future," the person said. The person cautioned the negotiations could fall apart, but said slow and steady progress is being made toward a deal.
The discussions have dragged for nearly two months amid wrangling with a wide-ranging buyer consortium over how to structure a transaction. Kodak at one point said the patents could be worth as much as $2.6 billion, but bids started between $150 million and $250 million, followed by a flurry of offers in different shapes and sizes for some or all the patents, people familiar with the matter have said.
On other fronts of Kodak's restructuring, the company is near a deal with a group of retirees that could result in terminating $1.2 billion of benefits, said the person familiar with the matter.
Kodak also on Friday outlined 2,700 job cuts and an additional 1,200 workforce reductions on the way. The layoffs and other cuts ultimately will reduce Kodak's workforce by 23% and result in $340 million in annual cost savings, the company said.
