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Kodak: The End of an American Moment

Stocks in this article: EKAAPLEMNBBRY

ROCHESTER, N.Y. (TheStreet) -- "They hired a f---ing clown."

That was Kathy Avangelista's comment about a man tasked with pumping up a crowd that had gathered in the summer of 2007 to watch the implosion of Building 9 at Eastman Kodak's manufacturing complex -- still one of the world's largest industrial facilities -- in Rochester, N.Y., known by former employees as Kodak Park.

After more than a century of opulence, outsized executive compensation, annual bonuses and generous separation agreements, Eastman Kodak literally was imploding, and just a few years from bankruptcy. So what was one more expense?

The "clown" was an employee of the company who was wearing silly clothes, jumping up and down, "acting generally goofy" and hollering 'Boo-yah! Boo-yah! Boo-yah!,' recalls Avangelista, a former 40-year Kodak employee.

The throng watching the spectacle cheered as the building crashed to earth and spewed a plume of gray powder into the air.

But to Avangelista and other former employees who witnessed the demolition of many Kodak buildings beginning in the 1990s, it was a sad moment.

"They were trying to celebrate a new product while they were celebrating the destruction and demolition and the implosion of the buildings in what they considered the old business, you know?" Avangelista says.

The old business was more like a family. Employees met their spouses at Kodak, their children worked there, the most talented engineers and business people around the world competed for the company's positions.

Building 9 handled paper finishing. Building 23, where Avangelista worked for two decades, was the engineering division that designed and maintained manufacturing equipment and services at Kodak Park. The company imploded 23 the next day. It was one of more than 100 buildings that Kodak appraised as "surplus and obsolete," which by 2007 could have described its fading photographic film business that for more than a century had made the company one of the most recognizable brands in the world.

In 2012, when Kodak was forced into Chapter 11, the company reported a loss of $1.3 billion on revenue of $4.11 billion, a near 80% decline from its best-ever annual report in 1991. There is now a phrase to capture such failure: a Kodak moment.

Kodachrome film, once so commonplace that it served as a hook in a Paul Simon song, had faded as consumer preference shifted in the early 2000s to digital images -- a transition that all but crippled the maker of the first digital camera.

In searching for people or events to blame for Kodak's downfall, some might pick on the 25-year-old Kodak employee, Steve Sasson, who coined the phrase "filmless photography." But in fact the company's downfall is a more complex tale of a powerful company that failed to come up with the next big idea.

This is the story of Eastman Kodak's fall.

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