Kodak Phasing Out Digital Camera, Picture Frame Division Under Bankruptcy

Eastman Kodak Co. (EK), the photography pioneer that filed for bankruptcy last month, said it will phase out the unit that makes digital cameras, pocket video cameras and digital picture frames.

Kodak will seek to license its brand to other makers of the devices as it exits cameras in the first half of 2012, the Rochester, New York-based company said today in a statement. It will book a $30 million charge and estimates saving $100 million annually, while pledging to honor warranties and provide technical support.

The move reduces Kodak’s consumer offerings to printing photos and selling film and inkjet printers, as the 131-year-old imaging company shrinks into a digital-printing specialist that intends to sell more faster, flexible commercial and consumer digital printers to profit from ink sales.

Kodak filed Chapter 11 last month after years of burning through cash when digital dissolved its film business. The company that pioneered the digital-imaging technology that gutted its iconic photography business has shed 47,000 employees since 2003 and closed 13 factories that produced film, paper and chemicals, along with 130 photo laboratories. The restructuring has already cost $3.4 billion.

Patent Sale

Kodak is trying to sell more than 1,100 digital-imaging patents, and is pursuing device makers including Apple Inc. (AAPL) and Research In Motion Ltd. for patent-infringements, maintaining the companies owe it royalty payments.

Bankruptcy makes it easier for Kodak to sell assets to pay for layoffs, U.K. and U.S. employee pensions and health-care benefits, and provide capital needed to install a big enough base of digital printers to eventually be profitable.

Kodak also has asked the bankruptcy court in Manhattan for permission to end its naming rights sponsorship of the Kodak Theatre in Los Angeles, which hosts the annual Academy Awards, citing significant savings from the termination.

CIM/H&H Media LP, the company that assumed the contract, said in a court filing yesterday that the name recognition of the Kodak Theatre “is the precise benefit Kodak sought in entering into the 20-year sponsorship agreement.” Backing out of the agreement is “not only legally impermissible, but practically impossible,” CIM/H&H Media said.

Kodak is obligated to pay $72 million over 20 years, CIM/H&H Media said.

The case is In re Eastman Kodak Co., 12-10202, U.S. Bankruptcy Court, Southern District of New York (Manhattan)

To contact the reporter on this story: Beth Jinks in New York at bjinks1@bloomberg.net

To contact the editors responsible for this story: John Pickering at jpickering@bloomberg.net; Ville Heiskanen at vheiskanen@bloomberg.net

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