Executives of Eastman Kodak Co. have a plan to keep the 131-year-old imaging pioneer alive that the markets seem to like.
Shares of the Rochester, New York-based company were up more than 31% to 52¢ (US) in early Tuesday trading on the Nasdaq after the camera maker announced a restructuring plan designed to “increase productivity, reduce cost and accelerate its transformation into a digital company.” It was a positive change in Kodak’s fortunes after its shares plunged last week on reports it was preparing a chapter 11 bankruptcy filing.
By midday, Kodak stock was up more than 47% from Monday’s closing price to 59¢ (US) per share.
Under the new corporate structure, Kodak will be split into two business segments. Laura Quatela will run the new consumer division, Philip Faraci will run the new commercial division and both will hold the title of ‘president/chief operating officer,’ reporting to chief executive Antonio Perez.
“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,” Mr. Perez said in a statement.
“These business structure changes also allow us to allocate resources more productively, continue to significantly reduce administrative costs, and improve efficiency.”
Kodak used to be organized around three business segments: Graphic communications, consumer digital imaging and film, publishing and entertainment. Effective as of January 1, graphics and entertainment will fall under Mr. Faraci’s commercial segment and Ms. Qualtela will be in charge of event imaging and intellectual property as head of the new consumer division.
At its peak, Kodak employed 145,000 people worldwide and had a market value topping US$30-billion. Since the late 1990s, the company has been struggling to survive as the non-digital photography market has gone the way of the gramophone and Kodak has lost more than 90% of its value over the past year alone.
With its current market capitalization standing at approximately US$130-million, the company’s multibillion-dollar patent portfolio has recently made it an attractive acquisition target. Although Kodak has been having difficulties trying to sell its intellectual property despite growing demand for IP in the technology industry.
So while the plan announced Tuesday appears to be a strong step forward, shareholders should be cautioned Kodak still has many more to make.