Rochester Business Journal

Few Rochesterians are old enough to recall a time when Eastman Kodak Co. employed fewer people locally or its stock traded at a lower price. Just as few probably thought they might live to see the day when the photo giant filed for bankruptcy.
 
Yet talk of bankruptcy-or worse-has dogged Kodak for months, although company officials have steadfastly denied it is being considered. "I think 2012 is the year Kodak files bankruptcy," Brighton Securities Corp. president George Conboy said this week.
 
Moody's analyst Rick Lane is equally downbeat. "Absent material funding or patent sale proceeds, our analysis shows Kodak running out of domestic liquidity between the second and third quarter of 2012," he wrote after the company posted its latest quarterly results. "Kodak continues to burn cash as it labors along a multi-year effort to transform its business model into a digitally oriented imaging company."
 
All signs point to 2012 as the decisive year.
 
The bankruptcy talk, sparked by Kodak's decision to hire outside advisers to help it explore strategic options, has been fueled in part by the belief that a reorganization under court protection would ease "claw-back" concerns that bidders for its patent portfolio might have. A filing also could help the company pare legacy costs such as retirement obligations.
 
Some Kodak watchers believe, however, that a more likely scenario is an investment by or sale to private-equity interests. The company adopted a poison pill in August but has faced pressure from some quarters to ditch it.
 
Kodak chairman and CEO Antonio Perez also has described 2012 as a decisive year for the company. In his view, the coming year will begin to reveal how a new Kodak can thrive in the digital era.
 
For Rochester, much is at stake. Although Kodak's local employment has plunged roughly 88 percent-or more than 53,000 jobs-since it peaked in the early 1980s, some 7,000 residents still earn a living there. And thousands of Kodak retirees also have much on the line.
 
The community, of course, is hoping for the best, but it also must prepare for the worst. For local leaders, that means doing even more to foster the growth of scores of companies geared for tomorrow's economy.

The goal must be the ability to thrive-with Kodak or not.

12/30/11 (c) 2011 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.