Kodak Creates New Business Structure

Eastman Kodak Co., the unprofitable 131-year-old imaging company, adjusted its management structure and created a chief operating office to reduce costs as its sales decline and cash reserves dwindle.


The chief operating office will be led by Philip Faraci and Laura Quatela, both presidents at Rochester, New York-based Kodak. Faraci will focus on the commercial segment and sales and regional operations, and Quatela will focus on the consumer segment and certain corporate functions, Kodak said today.


Kodak has struggled since demand for photographic film began evaporating as the world embraced digital cameras. Chief Executive Officer Antonio Perez, who took the helm in 2005, bet a turnaround on digital printers for publishers, packagers, advertisers and households. The company is weighing options including a bankruptcy filing, three people familiar with the matter said in September.


“This changes nothing,” said Amer Tiwana, an analyst at CRT Capital Group LLC in Stamford, Connecticut. “They haven’t provided any specifics around what kind of financial benefit this will yield.”


Faraci, president and chief operating officer since 2007, and Quatela, the company’s former general counsel who was last month named as a second president, both report to Perez.


Shares of Kodak rose 31 percent to 52 cents at 11 a.m. New York time after gaining as much as 35 percent. The stock declined 88 percent last year.


Under the new structure, Kodak reduced its segments from three to two--commercial and consumer--which will both report to a new chief operating office led by Philip Faraci and Laura Quatela. Faraci will continue to serve as Kodak's president and chief operating officer and will focus on the commercial side. Quatela, who was recently named, alongside Faraci, to both positions, will focus on the consumer segment. The changes were effective Jan. 1.


Shares climbed 34% to 54 cents in recent premarket trading.


"This new structure simplifies the organization, focuses it more precisely on our consumer and commercial customers, and puts the right people in place to capitalize fully on the tremendous technological capabilities of Kodak," said Chief Executive Antonio M. Perez.


Casting about for alternatives to its lucrative but shrinking film business, Kodak toyed with chemicals, bathroom cleaners and medical-testing devices in the 1980s and 1990s, before deciding to focus on consumer and commercial printers in the past half-decade under Perez.


None of the new pursuits generated the cash needed to fund the change in course and cover the company's big obligations to its retirees. A Chapter 11 filing could help Kodak shed some of those obligations, but the viability of the company's printer strategy has yet to be demonstrated, raising questions about the fate of the company's 19,000 employees.


The three previous segments were the graphic communications group, which provided digital equipment and software to printing industries, the consumer digital imaging group, which focused on print images, and film, photofinishing and entertainment, the company's traditional film and photographic paper products.


The commercial segment will take up the graphic group and the consumer segment will take all of the consumer digital imaging group. The traditional film business will be broken up into the two new segments.