Polaroid cuts R&D, digital plans
Under new owner, firm is little more than brand name
By Jeffrey Krasner
Boston Globe Staff
August 2, 2005
http://www.boston.com/business/technology/articles/2005/08/02/polaroid_cuts_rd_digital_plans/
Three months after completing its takeover of Polaroid Corp. in Waltham,
Petters Group Worldwide LLC has abandoned the company's digital imaging
technology and laid off most of its once-vaunted research and development
staff, according to an internal memo and Polaroid employees.
The moves, detailed in a July 11 memo, mean Polaroid is now little more
than a brand name, which Petters has affixed to a line of standard consumer
electronics, and a shrinking manufacturing operation that produces instant
film for Polaroid cameras.
''For more than a year now, we have been negotiating with several strategic
partners to find the best way to commercialize our Instant Digital Printing
technology," wrote J. Michael Pocock, Polaroid's chief executive, in the
memo to employees. ''Unfortunately, some of those prospects failed to
materialize necessitating a change in strategy and a reduction in our
workforce."
More than 100 employees in research and development at the company's
Waltham and New Bedford facilities have been laid off in recent weeks,
according to several current and former employees.
A Polaroid spokeswoman said officials would not comment on the layoffs or
severance payments.
The abandonment of the once-promising printing technology is a sad coda to
Polaroid's long decline from a Fortune 500 technological powerhouse to a
brand name exploited for short-term profit.
Polaroid's decline began in the mid-1990s, when the company lost direction
and digital photography began to threaten its core instant photo business.
In 1995, an outsider, Gary T. DiCamillo, was hired to lead the company.
DiCamillo failed to put in place a successful long-term strategy, and
financial mismanagement and slowing sales created a cash crisis.
Polaroid declared bankruptcy in October 2001. By laying off thousands of
workers and adopting other cost-cutting measures, the company stabilized
and was sold for $237.7 million in August 2002 to a group led by One Equity
Partners, a Chicago investment firm. In January of this year, the company
agreed to be bought by Petters for $426 million. Petters, based in
Minnetonka, Minn., acquires and operates businesses in fields as disparate
as kitchenware, mechanics' tools, and scrapbooks.
The sale was a bonanza for Pocock and other top executives, many of whom
served Polaroid for brief tenures. Pocock, who joined the company as chief
executive in 2003, received $8.5 million for his shares. In a July 28 memo
to employees, Petters Worldwide's chairman, Thomas J. Petters, said Pocock
was leaving Polaroid and that Stewart Cohen, a Petters official, would
become Polaroid's chairman, working in Waltham.
Polaroid's new strategy, Petters wrote, is to sustain ''profitability and
cash generation" while introducing Polaroid-branded consumer electronics in
overseas markets and cutting costs by sharing services with its parent company.
Throughout all of Polaroid's transitions, employees have suffered. Just
before it filed for bankruptcy protection, the company eliminated lifetime
health and life insurance for retirees. Polaroid stock, which employees had
been forced to buy and hold for a decade, became virtually worthless after
the bankruptcy. One Equity Partners refused to take over the Polaroid
pension plan, saddling the federal government with the obligation and
forcing some employees to accept cuts in their monthly payments.
Meantime, many executives were able to cash out of their retirement plans
and reclaim deferred compensation before the bankruptcy. Others received
bonuses for continuing to do their jobs, and many received shares in the
new company that emerged from bankruptcy after the acquisition by One
Equity Partners.
When the Petters acquisition was finalized in April, Thomas J. Petters
expressed optimism about Polaroid's technology. ''Our ability to rapidly
develop and deploy innovative consumer electronics and digital imaging
products coupled with Polaroid's respected brand, promising technology and
dedicated employees position us well to meet the challenges of the future,"
he said in a statement.
Petters did not respond to phone calls yesterday seeking comment.
As it teetered on the edge of insolvency in spring 2001, once-great
Polaroid unveiled printing technologies intended to underpin its revival,
including a digital printing process that provided the quality of
traditional film prints in seconds. The company rolled out a few test
kiosks around the Boston area in early 2003, but shuttered them last year.
David Gordenstein, president of Zeff Photo Supply in Belmont, one of the
test sites, said the kiosk was popular, but the technology is now outdated.
He has replaced the kiosk with a system that gives customers a choice of
instant printing or photo-lab printing from their digital memory cards.
Ron Glaz, digital imaging analyst at IDC in Framingham, said he was first
briefed on the new printing technology, called Opal, in late 2000. He said
it could have worked if Polaroid had deployed its kiosks where they would
have attracted heavy use. But its time has passed, Glaz said.
''It just so happens I was talking to a colleague about Polaroid last week,
and I said they could probably sell that print technology to Kodak for
about five cents on the dollar, based on what they had invested in it," he
said.
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
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