From the London Times:
February 07, 2007
Kodak may pull down the shutters on film business
James Doran in New York
Kodak is considering hiving off its traditional photographic film arm
and selling or spinning off the business it created more than a
century ago.
The business, which has long been in decline, could raise as much as
$1.5 billion (£664 million), according to Wall Street analysts.
Antonio Perez, the chief executive of Kodak, who came in three years
ago to turn around the ailing company, believes that the traditional
film business has just a decade of growth ahead of it.
To get out of traditional film would be a watershed for Kodak, the
company that invented the consumer camera and pioneered the modern
film industry. The business has been in decline for years as the
photographic industries have been overtaken by the digital revolution.
Mr Perez told The Timesthat the Hollywood movie industry is the last
big film customer in the world, but that digitisation is gathering pace.
“Digital film is in its infancy in Hollywood, but in maybe three
years we will see much more of it,” Mr Perez said, adding that he
expected Hollywood to have almost completed the switch to digital
within ten years.
He declined to comment about a possible sale or spin-off of the film
business, but a source close to the company said that the idea had
been discussed by Kodak board members and senior executives and was
well within the realms of possibility.
“We will do whatever is good for this company and whatever is good
for shareholders,” Mr Perez said.
Analysts welcomed the talk of a potential sale of Kodak’s film
business, as it would enable the company to devote much-needed
resources to its burgeoning print and digital arms, which lag behind
the industry leaders.
Most analysts believe, however, that Kodak’s film business will not
command a high price because its fortunes are clearly declining in
America and Europe. Sales of traditional camera film have many more
years of growth remaining in Asia and parts of the Third World,
however, where digital technology has not yet gained a strong foothold.
Asian movie centres, such as Bollywood, are also expected to use film
longer than the Hollywood industry.
Even so, most analysts believe that the business would command a
price only equal to about 0.5 times annual sales.
Sam Doctor, a JPMorgan analyst who covers Kodak, estimates that the
company’s traditional film business will make sales of about $3.4
billion in 2007, declining to about $2.7 billion in 2008.
He said that the Kodak arm also owns a large amount of valuable real
estate that could inflate its value.
Winsor
Long Beach, California, USA
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