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Polaroid Waits for Research Payoff

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POLAROID'S own picture is looking a bit unfocused. The company's trademark instant snapshot business has matured and film sales have slumped for a second consecutive year.

Polaroid, based in Cambridge, Mass., is banking on two new products to put it on the road to recovery: a compact instant camera and a sophisticated laser imager for medical diagnostics.

Over the past five years the company has plowed more than $100 million into developing these products and new markets, executives say. Over the long term, the company plans to diversify from its core photographic business.

With Polaroid stock selling at less than two-thirds its 1988 high and revenues inching upward, the company hopes to start seeing a return on its research and development costs by mid-summer. Cutting 455 workers this year should help financial results.

At present, 95 percent of Polaroid's business is photography, says Sam Yanes, director of corporate communications. In the next decade that will change to "not much more than 50 percent."

Polaroid sees its future strength in digital imaging, a process of electronically producing, transferring, and manipulating images. Digital imaging is used in fields as diverse as desktop publishing, medical diagnostics, and graphic arts.

Mr. Yanes predicts that while the photography business will probably not exceed 3 percent annual growth, imaging has the potential of 9 or 10 percent. Polaroid's strategy is to use the profits from its photographic base to invest in these faster-developing areas, Yanes says. Expanding product line

Until the company gets a firm foothold in the digital imaging market, where competition from computer and electronics companies is fierce, its hopes are pinned on the two new products.

Visions - a compact instant camera, with a picture-storage slot in the back - is targeted at active, affluent consumers who have not used instant photography before.

Launched in Europe last September, demand for Visions has already outstripped supply, he says. In mid-March it was introduced in Japan. Despite being the company's largest market after Germany and the US, Japanese consumers have not always embraced Polaroid cameras. "Part of that was cultural, but part was that we didn't have a product that appealed to them," Yanes says. But Polaroid is sufficiently confident this time that it has rolled out a nationwide advertising campaign - the first in five years. Th e camera is being introduced domestically this summer.

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