Eastman Kodak has announced plans to transfer its entire digital camera assembly, production, and testing to Singapore-based company, Flextronics International.

 

August 7, 2006: Eastman Kodak has announced plans to transfer its entire digital camera assembly, production, and testing to Singapore-based company, Flextronics International.
Under an agreement, which was announced several days ago, Flextronics will also manage the operations and logistics services for Kodak’s digital still cameras. As part of the deal, Flextronics will acquire a significant portion of Kodak’s Digital Product Center Japan’s facilities in China and Yokohama, along with Kodak Electronics Products Shanghai in China. However, Kodak will retain all intellectual property and patents as part of the transaction as well as Kodak trademarks, Kodak trade names, Kodak customers, customer information and customer relationships, Kodak feature specifications, Kodak digital camera designs and Kodak digital camera technologies. Under the agreement, approximately 550 Kodak personnel are expected to be transferred to Flextronics facilities.
Kodak claims the divestiture of this section of its business will allow it to “streamline” digital camera operations. “This agreement will bring our camera products to market more quickly, with greater predictability, flexibility, and cost efficiency”, a Kodak spokesperson is quoted as stating. However, some commentators see the move as “probably intended to placate investors after a disastrous second quarter”, where recently-reported net losses of $282 million were higher than expected. Kodak is also seen as having more difficulties with the transition from film to digital capture than other leaders in the digital camera market. The transaction is subject to customary regulatory approvals but does not require shareholder approval from either company. The agreement is expected to take effect during Kodak’s third quarter of 2006.