By Devin Coldewey
Poor Kodak (EK). At this point, they’re just along for the ride. The last few years have been rough on them, and they’ve made a few big decisions that haven’t panned out. I must admit that while my unsolicited advice to them was sound, it probably would have to have been put in place a decade ago for them to have avoided the current state of things. As it is, the WSJ has word that they are planning to file Chapter 11 and do a court-supervised auction of their many digital imaging patents.
It’s sad, but the truth is that while Kodak is very much still a valuable company, it’s simply not a viable business any more. Their efforts to change the business they’re in came too late — and now they’re in the business of going under.
In some ways, it’s a good call (not that I’m a big bankruptcy expert), but it’s also risky. Kodak has been trying to offload more than a thousand patents in order to gain the cash it needs to keep operating. It’s not clear what exactly they’d be doing after they sold off the most valuable part of the company, but they might have noted that “a living dog is better than a dead lion,” and opted for solvency and a lease on life.
Whatever their intentions, the patents haven’t sold. They sold their sensor business related assets, but the patents are still on the shelf. Why? Kodak practically invented the digital camera, and some of their IP must surely be useful to the likes of Sony or Samsung.
The problem, I’m guessing, is this: why pay full price when you know the store’s going out of business? If Sony (NYSE:SNE) and Samsung (OTC:SSNLF) both wanted a set of patents, Kodak would keep them both informed if the other bid something, so they run little risk of having their targets slipped out from under their noses. And in the meantime, Kodak swirls endlessly towards bankruptcy, at which point the whole patent portfolio will be on the block for public bidding and unbeatable prices.
Unfortunately, it’s extremely unlikely that Kodak will bounce back from this. The only way they can live is by selling their core assets and taking a fortune in loans, and after that there’s nothing to do but sell the brand and find work as a badge for other people’s products. Oh fate most ignominious! But it is their own doing.