According to the letter to customers, in the company's four-year experience in digital filmmaking, it has accomplished one of the most important strategic objectives of enabling filmmakers to work at the quality levels of film - while falling short of its financial goals. The letter cited the high and continuing investments required in technology, the widespread nature of a relatively small customer base, and Kodak's challenging financial targets as contributors to the unsatisfactory financial situation.

For its digital motion imaging software business, Kodak is exploring a number of options ranging from a strategic relationship to a sale of the business. Kodak indicated it is in discussion with a number of companies, seeking an industry leader who has the 'critical mass' and long-term commitment to serve Kodak's customer base with a continuing stream of high-quality, innovative products. While the search is underway, Kodak will complete work on - and bring to market - its anticipated Cineon software Version 4.0 .

In hardware, the company said that while its Cineon Genesis scanners and CineonLightning recorders have been well-received by customers and the special effects industry is healthy, the industry's needs are met by a number of facilities that provide scanning and recording services and the size of the worldwide hardware market does not justify Kodak's continued participation.

Even as PMI made those announcements, it emphasized that it intends to continue to push the boundaries of digital, film, and hybrid technologies and will apply its capabilities to selective opportunities that make long-term business sense - and enable its customers to work at standards associated with film quality.