Rochester, New York, May 15 (Bloomberg) -- Eastman Kodak Co., the world's largest photography company, may have to write off "tens of millions'' of dollars invested in a failed venture with Hewlett-Packard Co. that was making picture-developing kiosks.
Kodak was counting on the mini-labs to catch up to Fuji Photo Film Ltd.'s five-year head start in offering in-store kiosks that people use to develop pictures taken with digital cameras. Analysts estimated Kodak spent at least $50 million on the Hewlett- Packard project, which the two companies dissolved yesterday.
Kodak will now focus on a development agreement with Noritsu Koki Co. of Japan as its "core'' mini-lab, spokesman Anthony Sanzio. Kodak gets about 71 percent of its revenue from selling film and the chemicals and paper needed to develop photographs. The popularity of digital cameras, which don't need film, has contributed to three straight years of declining sales at Kodak.
"Fuji is farther along with digital technology that Kodak,'' said Richard Stice, an analyst with Standard & Poor's Investment Research Inc. who rates Kodak stock a "sell'' and doesn't own it. "Kodak was late to the game and now they have to play catch up.''
Fuji introduced a free-standing digital kiosk in 1997 that makes prints while customers wait. Kodak had just started taking orders for its Phogenix machine developed with Hewlett-Packard and had expected the venture to generate $500 million to $1 billion in sales by 2005. No Phogenix machines had been installed.
"Based on the anticipated return on invested capital for the parent companies, each company has separately decided to focus'' on other opportunities,'' Kodak said in a statement yesterday.
The financial implications of ending the venture are being considered and are "not likely to be very material'' Sanzio said. Details will be given when earnings are reported in July, he said.
Shares of Kodak fell 17 cents to $29.95 as of 6:40 p.m. The stock had dropped 9.8 percent in the past year.
Source : DPReview.com
Kodak was counting on the mini-labs to catch up to Fuji Photo Film Ltd.'s five-year head start in offering in-store kiosks that people use to develop pictures taken with digital cameras. Analysts estimated Kodak spent at least $50 million on the Hewlett- Packard project, which the two companies dissolved yesterday.
Kodak will now focus on a development agreement with Noritsu Koki Co. of Japan as its "core'' mini-lab, spokesman Anthony Sanzio. Kodak gets about 71 percent of its revenue from selling film and the chemicals and paper needed to develop photographs. The popularity of digital cameras, which don't need film, has contributed to three straight years of declining sales at Kodak.
"Fuji is farther along with digital technology that Kodak,'' said Richard Stice, an analyst with Standard & Poor's Investment Research Inc. who rates Kodak stock a "sell'' and doesn't own it. "Kodak was late to the game and now they have to play catch up.''
Fuji introduced a free-standing digital kiosk in 1997 that makes prints while customers wait. Kodak had just started taking orders for its Phogenix machine developed with Hewlett-Packard and had expected the venture to generate $500 million to $1 billion in sales by 2005. No Phogenix machines had been installed.
"Based on the anticipated return on invested capital for the parent companies, each company has separately decided to focus'' on other opportunities,'' Kodak said in a statement yesterday.
The financial implications of ending the venture are being considered and are "not likely to be very material'' Sanzio said. Details will be given when earnings are reported in July, he said.
Shares of Kodak fell 17 cents to $29.95 as of 6:40 p.m. The stock had dropped 9.8 percent in the past year.
Source : DPReview.com
