Kodak collapses as it fails to keep up with the times

Founded in 1880 by inventor George Eastman, the company has spent the past two decades failing to keep up with the digital revolution that has killed off Kodak's main markets of film-based photography. Its demise under the leadership of chairman and chief executive Antonio Perez is sure to become a text-book case for future business studies students of a company which could not keep up with the times.

Ironically, it was Eastman Kodak which invented the first digital camera in 1975. However, fearing the new science would cannibalise its traditional business, it effectively sat on the new creation which was then taken up with gusto by the likes of Japan's Canon and Nikon. Those giants now dominant the more profitable, high-end digital camera market, leaving Kodak with a few cheap models which are rapidly being superseded by mobile phones.

Ajay Bhalla of Cass Business School said: "This is a company that just became very outdated."
Analysts said the company has been spending much of the past few years suing its competitors in a bid to bring in cash. Only today it filed a suit against Samsung Electronics over patent infringements.

Under US law, bankruptcy protection allows a company breathing space from its creditors to reorganise its business and debts. Eastman Kodak's filing lists its assets as worth $5.1 billion (£3.3 billion) and its debts at $6.8 billion. The company said it had secured $950 million of funding from Citigroup to tide it over its reorganisation.

However, given the crisis it faces, it remains unclear what shape it will take when it emerges. Bhalla said: "They have a huge patent portfolio, which is probably the only valuable part of the business left. From here there are probably two options: first, sell the patent portfolio, like Nortel did. Second, and this is highly unlikely, find a buyer for the business. There is really no value left in the Kodak name."

Bhalla pointed out that successive management teams had failed to deal with the core crisis of being in a dramatically shifting marketplace.

Where one-time film rival Fuji film moved into LCD screen technology and even adapting its chemicals to the pharmaceuticals industry, Kodak continued to keep film at the heart of its business in the mistaken belief that it should continue to base itself around its business heritage.