January 12, 2011
By: Brenna Lemieux
The Associated Press reports that Eastman-Kodak, the one-time giant of photography film, has taken another step toward filing for bankruptcy. Kodak’s stocks dropped significantly last week after investors, reportedly uncomfortable about the company’s likelihood of needing bankruptcy, unloaded stocks and pushed the value of Kodak stocks down to 47 cents.
The main difference in Kodak’s position on bankruptcy in the past several months was an announcement last week that it will likely choose bankruptcy protection if it is unable to sell the roughly 1,100 digital patents it currently owns. In previous statements, Kodak officials made no explicit comments about plans for bankruptcy, though in the fall of 2011, the company did hire a firm known for its help to financially distressed companies.
When digital photography established itself as the norm, Kodak faced serious financial losses; between 1999 and 2011, reports note that it lost approximately 95 percent of its value. Despite its current woes, Kodak reportedly does have a plan for (potentially) pulling itself back to profitability – but as yet, that plan hasn’t quite panned out.
Kodak’s hope for the long-term future lies in high-quality ink-jet printers for homes and offices, which have become more popular as more and more photo-takers print digital pictures directly from cameras and smart phones, rather than taking film in to be developed out of the home.
Though the printers have not yet proved profitable for Kodak, sources note that the company expected sales in the final quarter of 2011 (October through December) to tip the scales toward profitability, as the holiday season has historically helped that make the company’s most profitable quarter.
In the short term, it seems, Kodak plans to sell the rights to the more than 1,000 patents it owns. In recent years, it has been relying almost entirely on proceeds from such patents to bring in income, and the move to sell them indicates that the company needs a cash injection soon.
If Kodak does choose bankruptcy protection, though, it may not be for several months: at present, the company reportedly still has available cash reserves totaling $862 million.
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