- Associated Press - Tuesday, January 10, 2012

ROCHESTER, N.Y. — Beleaguered Eastman Kodak Co. said Tuesday that it has realigned and simplified its business structure in an effort to cut costs, rebuild shareholder value and accelerate its long-drawn-out digital transformation.

Its depressed shares shot up more than 45 percent in the wake of the announcement.

The 131-year-old photography icon has been pummeled by consumers’ switch to digital. Its fortunes deteriorated further last year, and it said in November that it could run out of cash in a year if it couldn’t sell a trove of 1,100 digital-imaging patents.

In one key to its business survival plan, the company also filed patent-infringement lawsuits against Apple Inc. and HTC Corp., claiming the smartphone makers are infringing several of its digital-imaging inventions.


The lawsuits, filed Tuesday in federal court, claim that some of Apple’s iPhones, iPads and iPods and HTC’s smartphones and tablet devices infringe on four Kodak patents related to image transmission. It also lodged complaints against Taiwan-based HTC and Apple, of Cupertino, Calif., before the U.S. International Trade Commission.

Since the start of the year, Kodak said it now has two business units instead of three. The commercial and consumer segments will report to a new chief operating office led by President and CEO Philip Faraci and Laura Quatela, who was also recently named to serve alongside him in those executive posts.

Previously, Kodak’s business segments were divided into its traditional film and photo paper products, consumer digital imaging and graphic communications, which included printing equipment.

Since 2005, Kodak has poured hundreds of millions of dollars into new lines of inkjet printers that are finally on the verge of turning a profit. Home photo printers, commercial inkjet presses, workflow software and packaging are viewed as Kodak’s new core.

Kodak is hoping the printer, software and packaging businesses will more than double in size by 2013 and account by then for 25 percent of its revenue, or nearly $2 billion.

“As we complete Kodak’s transformation to a digital company, our future markets will be very different from our past, and we need to organize ourselves in keeping with that evolution,” Chief Executive Antonio Perez said.

Kodak is also not announcing job cuts as part of the move, said spokesman Christopher Veronda. “However, we will continue to look for opportunities to streamline operations and properly position the company’s portfolio,” he said.

Kodak’s payroll has plunged below 19,000 from 70,000 a decade ago.

In the dozen years before 2011, Kodak had lost more than 95 percent of its value as it was pummeled by foreign competition and then shaken to its core by a digital revolution. Shares fell another 80 percent in 2011, having started the year at about $3. In November, it reported its ninth quarterly loss in three years and said its cash reserves had fallen 10 percent in three months. It posted its last annual profit in 2007.

Kodak reportedly has been preparing for a Chapter 11 bankruptcy filing if it can’t sell the digital-imaging patents, which analysts estimate could fetch as much as $2 billion to $3 billion. No buyers have emerged since the company started shopping them around in July.

The company’s stock rose 18 cents to 58 cents Tuesday. It briefly touched an all-time low of 36 cents last week. The New York Stock Exchange warned Kodak earlier this month that it would drop the stock if its price remained below $1 per share for the next six months.

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