Future might still be bright for Polaroid after its sale

With the sale of Polaroid Corp. to Bank One Corp.'s venturecapital operation now official, the Boston-based company now beginsthe process of rebuilding itself out of bankruptcy.

The instant film and camera company, built by founder Edwin Landinto one of the great research companies and one of the famed "NiftyFifty" stocks of the 1950s, has shed real estate, sold peripheralbusinesses and halved its work force since the start of 2001. Itfiled for bankruptcy last October, facing nearly $1 billion in debts.

Chicago-based Bank One bought the company for only $255 million.Its venture capital unit, One Equity Partners, acquires some debt butalso what one analyst estimates is $200 million in cash with the dealand no burdens from Polaroid's underfunded pension fund, which willbe taken over by the government. The unit has not discussed plans forPolaroid.

It gets a business burdened for years by top-heavy management andtechnological tardiness, but also a powerful brand name and a line ofproducts that some believe could make money again.

"I figure a couple of years you'll be seeing Polaroid again, as anIPO," said Ulysses Yannas, who follows the company at Buckman,Buckman & Reid.

OEP said partner Charles F. Auster would be chairman of the new,private Polaroid Corp.

Though Polaroid has kept its numbers to itself since itsbankruptcy filing last October, Yannas estimates the companycomfortably exceeds $1 billion in sales. It has strong operations inEurope and Asia that were not part of the U.S. bankruptcy filing, butwhich OEP nonetheless now owns.

"It was a steal," Yannas said of the sale.

There is also a potential cash-cow film business for Polaroidcameras that have already been sold. And, despite a trend toward"house" brands, Polaroid remains the house brand at Wal-Mart, thelargest photographic products buyer in the world. That arrangementhas brought in as much as $100 million annually, Yannas said.

Perhaps its biggest asset is the Polaroid name, which stillcarries weight. Polaroid continues to be involved in licensing deals.

If the new Polaroid is to fare better than the old one, it willhave to avoid its predecessor's mistakes.

The old company was burdened by huge marketing expenses and aninability to get control of management expenses.

It also made several key bad decisions, backing products thatnever panned out and failing to use a windfall from a patentinfringement lawsuit to pay down debts during the 1980s.

Land, a Harvard drop-out, introduced his first instant imagingsystem in 1947. A year later, the company introduced its first cameraand film, retailing it in Boston for $89.50.