- The Washington Times - Tuesday, November 8, 2011

Photography pioneer Kodak sold one of its companies this week in an attempt to stay afloat in an industry that has been drastically reshaped by advancements in technology during the past decade.

The Rochester, N.Y.-based company announced late Monday the sale of its image sensor business to Platinum Equity for an undisclosed amount analysts say is a first step in the direction of profitability. In recent years, Kodak failed to take advantage of booms in digital cameras and smartphone cameras.

“Image Sensor Solutions is a business that is well-positioned in the high-performance imaging markets in which it participates,” said Pradeep Jotwani, president of Kodak’s consumer digital imaging group and senior vice president of the company. “This sale maximizes shareholder value by obtaining a full and fair valuation for this business, and allows Kodak to increase its financial flexibility.”

Its image sensor business has been at the forefront of a number of breakthroughs in the film industry in the past 30 years, including developing technology for studio photography cameras, earth-imaging satellites, traffic monitoring and DNA sequencing systems.

The company said the sale would “sharpen Kodak’s operational focus and strengthen its financial position.”

Kodak, which built the first consumer-friendly camera in 1888, was founded by George Eastman and has been in business for more than a century but has failed to keep up with the times regarding consumer photography.

“This was a company that was the center of the photography world for decades,” said Jeff Kagan, a wireless and telecom industry analyst based in Atlanta. “Then the world changed. First digital cameras instead of strip film. Next cellphones started getting cameras. The problem is they have done nothing to build their tired brand. They are struggling for survival.”

Kodak and financial analysts have warned this might be the company’s last year unless it finds a way to raise an additional $500 million in financing. That money could come through patent sales, as is the case of its image sensor division, or loans. The company also has filed a patent infringement complaint against Apple and Research In Motion, but that case might not be settled in time to help Kodak.

Last week, Kodak reported a drain on its cash holdings. The company had $862 million in September, down 10 percent from $957 million in June, and Kodak may not recover from the decline.

Kodak executives never thought this could ever happen to them, so they didn’t prepare,” Mr. Kagan said. “Kodak should have seen this coming over the last decade. They should have put their brand name in the mix and on every wireless device.”

Moody’s, a credit-rating firm, said earlier this week that Kodak could run out of money in the second or third quarter of 2012. It already had downgraded the company’s credit rating.

“Trouble is, Kodak’s operations consume significant cash in the first half of every year, and the company’s third-quarter patterns also tend toward cash usage … without material cash inflows over the near term from intellectual property sales or licensing agreements, or the additional secured funding that the company is currently exploring, the probability of a debt restructuring mounts,” Moody’s analyst Rick Lane wrote in a report.

Kodak’s stock price closed at $1.14 on Tuesday.



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