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Wang may sell unit to Kodak

Wang confirms that it is in talks with Eastman Kodak to sell its software business to the film giant.

Wang (WANG) confirmed today that it is in talks with Eastman Kodak (EK) to sell its software business to the film giant.

Digital imaging products still represent a smaller portion of overall sales, but Kodak spokesman Paul Allen said digital sales for its commercial business is growing faster than its traditional film business.

"We see [digital media] as a growth opportunity and a way to grow our traditional film business," Allen said. Wang's software imaging unit allows companies to transfer paper documents to computers and networks.

An acquisition of Wang's software business would boost Kodak's efforts to expand its digital business in light of shrinking analog film sales. For Wang, the deal could possibly yield $200 million to $300 million at a time that it is recovering from its bankruptcy reorganization, analysts said.

"Kodak has been interested for some time in companies that would enhance its position in electronic imaging. This is a software company that fits the bill," said Jack Kelly, an analyst at Goldman Sachs.

Wang's imaging unit posted sales of $50 million last fiscal year and may reach as high as $80 million this year, analysts said. Kodak's digital business has been generating about $1 billion in sales annually but has still been losing money, Kelly said.

Kodak has had a relationship with Wang since last year, when the the companies entered into a strategic alliance to develop and market a set of common document imaging architecture. This alliance has formed the foundation for the business imaging systems unit, Allen said.