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Kodak will stop making digital cameras within the next few months. The company, currently in bankruptcy protection, will also stop making pocket video cameras and photo frames as a cost-cutting measure. Instead it is looking to license its name to other manufacturers who wish to sell cameras under the Kodak brand. Closing the business will cost around $30m, mainly in the cost of laying-off workers, but will save around $100m per year in running costs. All product warranties will be honored.
There was an outburst of nostalgia when the company announced it was discontinuing its famous Kodachrome color film but today's announcement that one of the innovators in portable photography and digital camera technology is leaving the business is a sad one. The company's recent retreat into bankruptcy protection means this step won't come as a complete shock but, whatever now happens to the company, its link to everyday photography has been broken.
Plans to phase out dedicated capture devices business
Eastman Kodak Company (the “Company”) (OTB: EKDKQ.PK) announced today that, as a result of its ongoing strategic review process and commitment to drive sustainable profitability through its most valuable business lines, it plans to phase out its dedicated capture devices business – comprising digital cameras, pocket video cameras and digital picture frames – in the first half of 2012. Kodak will instead expand its current brand licensing program, and seek licensees in these categories. Following this decision, Kodak’s Consumer Business will include online and retail-based photo printing, as well as desktop inkjet printing.
Kodak has contacted its retail partners, and is working closely with them to ensure an orderly transition. Kodak will continue to honor all related product warranties, and provide technical support and service for its cameras, pocket video cameras and digital picture frames.
“For some time, Kodak’s strategy has been to improve margins in the capture device business by narrowing our participation in terms of product portfolio, geographies and retail outlets. Today’s announcement is the logical extension of that process, given our analysis of the industry trends,” said Pradeep Jotwani, President, Consumer Businesses, and Kodak Chief Marketing Officer.
Upon completion of the phase out, Kodak expects to achieve annual operating savings of more than $100 million. Kodak expects to incur a charge related to separation benefits of approximately $30 million resulting from the exit of the business.
In addition to its Consumer Businesses segment, Kodak has a Commercial Businesses segment that includes the Digital and Functional Printing, Enterprise Services and Solutions, and Graphics, Entertainment and Commercial Films units. Kodak’s digital businesses now comprise approximately three-fourths of total revenues.
Kodak continues to have a strong position in the personal imaging market. While photos are increasingly taken on multi-function mobile devices, Kodak technology makes it easy for consumers to produce a broad range of photo products, anywhere, anytime – from prints to photobooks, photo greeting cards and personalized calendars. These items can be made on Kodak products, with Kodak quality at retail, at home, and ordered for delivery to home.
Kodak’s continuing consumer products and services will include: