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The New Polaroid: After Chapter 11

Polaroid Regroups, Refocuses and Farms Out Name for New Cameras

by Jerry O'Neill

The news about Polaroid Corporation has been troubling for the past year or more-first the company missed its targets for sales and profits, then it sold off many assets but was still very weak financially, and finally it went into Chapter 11 bankruptcy protection. However, as most people have probably noticed, Polaroid products didn't vanish from the market.

And now Polaroid is emerging from Chapter 11 as a new, privately held Polaroid Corporation owned by OEP Imaging Corporation. (See box on page 6.) The new arrangement eliminates more than $1 billion of debt for Polaroid and, according to the Boston Globe, the purchase by OEP gives the instant photo pioneer "a chance to end its bankruptcy within weeks and continue in business as a well-capitalized competitor." Polaroid lawyers said the deal could mean that all current Polaroid employees would keep their jobs. (But Polaroid has already cut its work force in half since 2001.)

Gary DiCamillo, who had been Polaroid's CEO and Chairman of the Board of Directors for six and a half years, left the company in July. Then John W. Loose, a board member since 1994, was named Chairman of the Board briefly, until the company was sold. Now, for the new company's day-to-day operations, there's no CEO; instead there's the Office of the President, comprised of William L. Flaherty and Neal D. Goldman, both Polaroid Executive Vice Presidents. As for the new Polaroid's Board of Directors, OEP partner Charles F. Auster will be Chairman of the Board.

So now that the new corporate ownership has been settled, what about Polaroid products?

Simply put, Polaroid will keep doing what it has done best-continue to manufacture and sell instant cameras and film. Financial analyst Ulysses Yannas, who follows Polaroid for Buckman, Buckman & Reid, points out that since over 150 million Polaroid cameras have been sold since 1976, the continuing demand for film will be significant even if only a small percentage of the cameras are still in use.

Polaroid will also still sell Polaroid-brand non-instant film such as 35mm, OEM'd for them by Agfa. (News reports say Wal-Mart is keeping this Polaroid-branded film as their house brand.) At this point it looks like the distribution channels for these products will stay pretty much the same.

Concord Camera Corp. of Florida has made a $2 million deal with Polaroid (which could reach $6 million over six years) to make Polaroid-brand 35mm and APS cameras, both one-time-use and reloadable. There are seven cameras in the Polaroid-brand OTU camera line, including flash models in both color and black-and-white film, daylight (non-flash) models, panoramic, and waterproof, all pre-loaded with 27-exposure 400 speed film.

In reloadable cameras, the new Polaroid compact camera line offers consumers point-and-shoot choices that include a big viewfinder camera, a slim-line model, and an ultra-compact APS model with three picture formats, at retail prices up to $29.99. More sophisticated models are in the Polaroid Zoom camera line, with eight zoom cameras that include both twist zoom and power zoom designs and zoom ranges from 30-50mm up to 38-125mm, at retail prices up to $99.99.

All of Concord's Polaroid-brand cameras should be available to retailers during the fourth quarter this year, through the same channels used to buy other Concord products, which include the brand names Concord, Keystone, Concord Eye Q, Le Clic, Goldline, Apex, and Argus.

Coming on the heels of the Concord deal, Spectra Merchandising International Inc. of Chicago announced it has an agreement with Polaroid to market a new line of Polaroid-brand digital cameras in the United States and Canada. The first one, already reaching retailers, is the Polaroid PDC 2150, a compact 2.1 megapixel model (1600 x 1200), non-zoom but with 2X digital zoom, 8 MB of internal memory, multi-mode automatic flash, LCD screen plus optical viewfinder, and a video-out jack to show still photos on any TV set. When tethered to a computer, the PDC 2150 can also be used as a webcam

Spectra's initial Polaroid-brand line of digicams will include six other models ranging in resolution and features from advanced webcams to 3- and 4-megapixel digital cameras. All should be available to retailers by the first quarter of next year, with retail prices ranging from $39.99 to $399.

What about special "camera store" models of Polaroid digicams? Patricia Schoenberg, president of Spectra, told PTN they are "on the roadmap" but not yet scheduled for introduction.

"The PDC 2150 is the first in a series of innovative Polaroid cameras that will bring the latest digital technology to consumers at especially attractive prices," Schoenberg noted. "The Polaroid brand is one of the most trusted in the world."

Dan Singleton, Polaroid's director of licensing, added that the Spectra-Polaroid partnership "should go a long way toward re-establishing Polaroid as a dominant player in the consumer digital camera category."

Who got what from the Polaroid deal?

The new, privately-held Polaroid Corporation is owned by OEP Imaging Corporation, created for the purchase by the venture capital group OEP, One Equity Partners, which manages $3.5 billion in investments for Bank One, sixth-largest financial institution in the U.S. OEP Imaging bought the old Polaroid for $255 million in cash plus taking over approximately another $200 million in liabilities. The purchase eliminates more than $1 billion of debt for Polaroid.