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Wednesday, 11 July, 2001, 17:56 GMT 18:56 UK
Polaroid's future picture clouded
Polaroid products
Polaroid products face competition from one-hour photo shops and digital cameras
Polaroid, the firm that invented instant photography, is discussing a debt-restructuring plan and may be giving serious consideration to filing for bankruptcy, the Wall Street Journal has said.

Following mounting losses, the company is under fire from its creditors and sorely needs to come up with a plan to prop up its sinking share price.

Graph showing Polaroid profits

Polaroid's other options include selling business units as well as its assets.

The news comes as the company struggles to transform itself into a digital-imaging company.

A company spokeswoman told the Wall Street Journal the company is exploring a "variety of alternatives," but did not elaborate on what they might be.

Third reprieve

Polaroid's creditors are prepared to grant a waiver on the company's debt, which exceeds $1bn, with assurances the company will find a long-term solution to its problems.

It is the third such reprieve this year, the newspaper reported.

The spokeswoman said the company is "optimistic" about getting an extension.

Polaroid's debts - part of which come due on Thursday in the amount of several hundred million dollars - could become immediately due if it is not granted the waiver.

Missed opportunities

Polaroid's failure to move beyond its core instant-photography business is often cited as the cause of its current woes.

I-Zone camera
Polaroid shares have fallen over 50% this year

Analysts say the company rested on its laurels for far too long and failed to anticipate competitive challenges such as one-hour photo shops and digital cameras.

But it is not an assessment all who cover the pioneering camera firm agree with. "The magic is still there," Buckman Buckman & Reid analyst Ulysses Yannas told the BBC.

Mr Yannas says much of Polaroid's instant photography business still enjoys big demand from law enforcement and the insurance industry.

"Polaroid film is still the only thing that the courts will accept as evidence because you cannot alter it," he says, adding that digital photography is particularly vulnerable to alteration.

"Once [a Polaroid] shot is made, that is it," he says. "Original and negative are the same thing."

Mr Yannas also pointed to new initiatives the company has launched that will allow it to resume profitability, including one that would allow consumers to print digital photos instantly on Polaroid film.

That, Mr Yannas says, is where the profits lie, "in the film - not the cameras."

Deadline looms

But with Thursday's deadline looming, and little certainty about what may happen, Polaroid's future is still very clouded.

Still, there is not much else the company can do.

After years of cost reductions, Polaroid has little fat left to cut, people familiar with the company told the Wall Street Journal.

One possible alternative is a "pre-packaged bankruptcy" filing, in which the company and its creditors would agree on a plan to rework outstanding debt, then take the plan to bankruptcy court.

In June, Polaroid said it intended to cut 2,000 jobs on top of the 950 positions it announced in February.

Last year, the company sold several real estate assets, including its headquarters building in Cambridge, Massachusetts.

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Polaroid cuts Scottish workforce
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