Kodak realigns business structure; sues Apple, HTC

ROCHESTER, N.Y. (AP) ? Eastman Kodak Co. said Tuesday that it is realigning and simplifying its business to cut costs, accelerate its digital transformation and boost its share price. The shares shot up 50 percent but remained at just 60 cents.

The ailing photography icon, which has relied on patent licensing fees and lawsuits for extra cash for years, also sued Apple Inc. and HTC Corp. on Tuesday. It claims their products infringe several of its digital-imaging patents.

As consumers switched to digital from film, Kodak has been pummeled, and it said in November that it could run out of cash in a year if it didn’t sell a trove of 1,100 digital-imaging patents. Its payroll has plunged below 19,000 from 70,000 a decade ago, and it hasn’t had a profitable year since 2007.

As of Jan. 1, Kodak said, it has two business units ? commercial and consumer ? instead of three. Both will report to a new chief operating office that is led jointly by Philip Faraci and Laura Quatela, who also both serve as president.

The company’s three former divisions were: traditional film and photo paper products; consumer digital imaging and graphic communications, which included printing equipment.

The lawsuits, filed in federal court in Rochester, claim that some of Apple’s iPhones, iPads and iPods and HTC’s smartphones and tablet devices infringe Kodak patents related to transmitting images.

Kodak also lodged complaints against the companies before the U.S. International Trade Commission, in Washington, D.C., which can order federal officials to block imports of products made with contested technology.

Calls to Apple, based in Cupertino, Calif., and HTC, based in Taiwan, were not immediately returned.

Separately, Kodak is pursuing a two-year-old dispute before the commission with Apple and BlackBerry maker Research in Motion Ltd. over the same image-preview technology.

It said Tuesday that a licensing deal with Apple and RIM could be worth up to $1 billion. The commission, seen as a faster mediator of patent disputes than courts, typically resolves disputes in 18 months.

Since 2005, Kodak has poured hundreds of millions of dollars into new lines of inkjet printers that it says are on the verge of turning a profit. Home photo printers, commercial inkjet presses, workflow software and packaging are viewed as Kodak’s new core.

Kodak is hoping that printers, software and packaging will produce more than twice as much revenue by 2013 and account by then for 25 percent of the company’s total revenue, or nearly $2 billion.

“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,” said Chief Executive Antonio Perez.

The bulk of Kodak’s products are now digital so the new structure divides the company by market more than by function. The consumer segment includes cameras, paper, home printers, film rolls, photofinishing, online photo-sharing and the intellectual-property unit. The commercial division contains motion-picture, industrial and professional film as well as high-speed presses, printing plates and software, document scanners and other printing products.

Kodak has not yet said whether or where it will make cuts.

“We will continue to look for opportunities to streamline operations and properly position the company’s portfolio,” said spokesman Christopher Veronda.

He declined to comment on a recent news report that Kodak is preparing a Chapter 11 bankruptcy filing in the event it can’t sell the digital-imaging patents, which analysts estimate could fetch at least $2 billion. No buyers have emerged since the company started shopping them around in July.

Kodak’s stock rose 20 cents to close Tuesday at 60 cents; the shares gained another 3 cents after hours. They briefly touched an all-time low of 36 cents last week.

The New York Stock Exchange warned Kodak this month that it would drop the stock if its price remained below $1 per share for the next six months.

Kodak reports its fourth-quarter results on Jan. 26.


AP Technology Writer Barbara Ortutay contributed to this report from New York.