March 2, 2012 at 1:24 PM ET
By msnbc.com news services
Kodak said Friday it has agreed to sell its online photo services business to Internet-based publishing service Shutterfly for $23.8 million as the bankrupt company continues to trim its businesses in a massive restructuring.
The move is part of Kodak’s plan to focus its operations. The photography innovator filed for bankruptcy protection in January and announced that it would no longer be making cameras and instead would narrow its focus to its core printer businesses.
Kodak is busy moving away from companies that aren’t part of its core mission, said Mark Kaufman, an investment consultant at MLK Investment Management.
Kaufman notes that commercial printing technology makes up around 75 percent of Kodak’s business now. It’s an area from which the company could potentially capture a lot of revenue, he added. One large commercial printer can generate between $1 million and $5 million a year as Kodak provides ink, software and maintenance services for it, he added.
By getting out of the camera business and selling the online photo services business Kodak will be shedding up to $900 million in revenue, but that still leaves Kodak with a company that generates $5 billion in revenue, coming in part from its commercial printing business, he added.
“That’s still quite a substantial company,” Kaufman said.
Kodak said it has entered into an agreement with Shutterfly for the proposed sale of certain assets of its Kodak Gallery on-line photo services business.
Shutterfly will take over Kodak Gallery customer accounts and images in the United States and Canada, and it will allow customers to opt out of the transition if they do not want their photos to be transferred.
Kodak said the deal with Shutterfly followed a "stalking horse" bid -- a starting bid or minimally accepted offer that other bidders must surpass in a court-supervised auction -- from the web-based personal publishing service.
Kodak Gallery -- which enables users to store and share their own images and create custom printed photobooks, cards and albums -- has more than 75 million users.
Kodak has also said it expected to fetch $1 billion to $2 billion from the sale of about 1,100 digital patents, which is due to get under way by June 30.
A source familiar with the patent sale said the process was moving forward, but added that the completion was not expected anytime soon.
Reuters contributed to this report.