Kodak’s Coyne embarks on second restructuring initiative in two years

Despite rumors, Health Imaging unit is not for sale

The chief executive of Kodak's Health Imaging business is implementing his second restructuring in two years as part of the film giant's broader effort to cut costs. Despite the cuts, which are expected to total 16,600 across the entire company, Kodak remains committed to medical imaging and does not plan to sell off the Health Imaging business, contrary to rumors that have swept the industry in recent weeks.

Coyne joined Kodak's medical imaging unit at the end of 1995 and was promptly assigned the task of restructuring the division in response to changes in the healthcare industry. Two years later, in November, he was ordered by Kodak management to implement another reorganization as the company strives to improve profitability.

Market analysts believe that Kodak has been suffering in its core consumer film market, where price cuts by Fuji have resulted in dropping market share. Simultaneously, Kodak's initiatives in consumer digital imaging have yet to come to fruition. Kodak in December said it would cut a further 6600 jobs in addition to the 10,000 workers let go as part of the restructuring announced in November.

Coyne said Health Imaging has made cuts across the entire division, with the goal of making the unit more efficient yet also more responsive to customers. In keeping with Kodak policy, Coyne declined to reveal how many workers are being let go from Health Imaging.

Kodak's R&D operations have also seen job losses. In the past, Kodak may have been guilty of trying to develop everything on its own, Coyne said. Kodak now intends to rely more on partnerships and alliances to access new technology. Two examples of this new strategy are Kodak's acquisition of the Nova MicroSonics ultrasound miniPACS division from ATL, and the company's partnership with Applicare Medical Imaging for PACS workstation technology. The new focus should enable Kodak to bring new technologies to market more quickly.

"Speed to market is more value-creating than breadth of product offerings that come out of R&D," Coyne said. "What we've really tried to do is prioritize from a customer perspective what are the most valuable projects for them, and then deploy resources to get those projects completed faster than we normally would have."

The divestiture rumors that swept the exhibit floor at last month's Radiological Society of North America meeting claimed that Kodak was planning to sell off Health Imaging as part of its restructuring. Johnson & Johnson was mentioned most often as the acquiring party. Kodak also heard the rumors, which Coyne said have no basis in fact.

"We are not being acquired, we are not being divested, and Kodak senior management is committed to the health business for the foreseeable future, in the long term," Coyne said.