To Wall Street, Polaroid Corp. remains a troubled company, one that few include on their recommended lists because of high spending this year and an uncertainty for the company's long-term future.

For employees, the cost-cutting measures following Shamrock Holdings Inc.'s unsuccessful hostile takeover attempt two years ago, has fundamentally altered the company that spent the 1980s laying off people and searching for a new strategy.

Given the gut-wrenching organizational changes in the past two years and a shrinking market for its cameras and film, shareholders at today's annual meeting will be asking chief executive I. MacAllister Booth what kind of company Polaroid will be in the 1990s.

"There is a real question in 10 years whether this is a buggy whip company," says Kim Ritrievi, a PaineWebber analyst.

Ritrievi is not alone in questioning Polaroid's long-term future, especially after the company's first-quarter earnings plunged 48 percent to $16.4 million, or 13 cents a share, from $31.8 million, or 43 cents a share, a year ago; sales rose 1 percent to $441.2 million. Based on the first quarter, Ritrievi estimates Polaroid will earn no more than 75 cents a share for the year, down sharply from 1990's earnings of $2.20 a share.

The earnings falloff is due to a combination of factors including foreign currency fluctuations from sluggish overseas sales, although Germany could remain strong. Travel is down and 80 percent of all passport pictures are taken on instant film.

Some analysts say this is Polaroid's "year of transition," tied to higher new-product startup costs, the weak domestic economy, increased legal expenses for the Eastman Kodak appeal case and a strong dollar.

"The question is whether Polaroid can come out with really competitive products between now and 1995," adds Brenda Lee Landry, a vice president at Morgan Stanley. "Polaroid's corporate goal is to be a supermarket of hard copy media -- not only instant film, but cheaper forms of making an image, whether it's on paper, plastic sheets, film or video tape. They've got some interesting things on their plate."

Polaroid is also betting that it can infuse new life into what it calls "family imaging," with a new small camera, code-named Joshua. The company maintains the camera was exhaustively researched for consumer acceptance. Joshua is expected to have a zoom lens, unavailable on current Polaroid cameras.

But some analysts say this core business is losing its allure.

"Polaroid cameras don't have as sturdy a feel as 35mm cameras and the cost per system exposure -- the cost of the film and camera combined -- is still rather high," says B. Alex Henderson, photography analyst with Prudential-Bache Securities. "We haven't seen a growth in the consumer business since they introduced the Spectra camera in 1986. Polaroid has not demonstrated the ability to stimulate the market by cutting costs."

But other analysts say Joshua could hit a home run for Polaroid. They note that while instant camera sales amounted to 1.4 million units out of 16.5 million cameras sold, it will not take much for Joshua to be successful. And with Polaroid's promise that this smaller camera is the most distinctly different in almost 20 years, Ty Govatos, a vice president for Donaldson, Lufkin &Jenrette recently told investors that half of all cameras are given as presents, "so you may get one even if you don't want one."

Another key product due out next year is Helios, a medical diagnostic-film media and printing system that uses lasers to crank out snapshot-sized reproductions of electronic images, such as sonograms, computer-aided tomography scans and X-rays. Beyond Joshua and Helios, Polaroid is expected to shift more of its emphasis into electronic images, possibly producing new kinds of cameras between 1993 and 1995.

"The central question for Polaroid is whether they can manage to build growth back into the system," said Henderson. "And that is a very tough prospect that will come down to the wire."

Boston Globe Newspaper

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