133-Year Old Kodak Warns It May Go Out Of Business, Here's Why

(MENAFN- Live Mint) The 133-year-old photography giant Kodak is fighting for survival. On Tuesday, the company shocked investors by admitting there's "substantial doubt" it can stay in business.

Kodak doesn't have enough money to pay $500 million in debts due within the next year . The warning sent its stock crashing 25% in a single day as panicked investors sold shares . Kodak currently has just $155 million in cash, far less than what it owes.

CEO Jim Continenza tried to calm fears, insisting Kodak is "confident" it can renegotiate its debts.

But the grim announcement marks another crisis for the company that brought photography to millions of families worldwide with its iconic Brownie cameras and yellow film boxes.

Kodak's emergency plan involves taking money from employee retirement funds. The company will stop putting cash into its pension plan and use $500 million from that fund to pay down debts . Finance chief David Bullwinkle promised workers they'll still get their pensions through insurance contracts.

By this Friday, Kodak expects to finalize how it will handle these pension changes, with the full switch planned by December . Meanwhile, Kodak reported dismal financial results: a $26 million loss last quarter compared to a $26 million profit a year earlier. Its cash reserves dropped $46 million since December.

The company blames rising material costs and weaker sales for the financial meltdown.

This isn't Kodak's first brush with death. The company once ruled photography, controlling 90% of film sales and 85% of camera sales in the 1970s.

Ironically, Kodak engineers invented the first digital camera in 1975 but company leaders ignored the technology to protect their profitable film business.

That mistake proved disastrous when digital photography took over. Kodak filed for bankruptcy in 2012 with $6.75 billion in debts, laying off thousands and shutting camera factories.

After emerging as a smaller company focused on commercial printing, Kodak briefly rallied in 2020 when the government gave it a $765 million loan to make drug ingredients during the pandemic. Its stock soared so fast it triggered 20 trading halts in one day.

Kodak's last hope might be a surprising shift to pharmaceuticals. The company is finishing a government-backed factory in Rochester, New York, to make medical chemicals.

The plant recently won FDA approval to produce phosphate buffered saline (a lab solution) and eventually aims to make injectable medicines . Kodak also benefits from young photographers rediscovering film cameras, leading it to increase film production recently.

Despite the crisis, Kodak still makes film, inks, and printing plates in America, something it says protects it from tariff problems.

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Whether these efforts can save the iconic company remains uncertain. As Kodak races to renegotiate its debts by next May, its future hangs in the balance.

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