Kodak Shares Gain on HP Buyout Rumor; Why Would Hurd Do That?

Kodak (EK) shares jumped Monday on rumors that the struggling photography company could be acquired, as the web site theflyonthewall.com reported.

One money manager I talked to said the rumor was that Hewlett-Packard (HPQ) might make a bid; but that seems far-fetched to me. True, the stock looks cheap on a price-to-revenue basis, at just 0.8x. But it also trades for about 30x expected 2008 EPS of 93 cents.

It seems to me Mark Hurd has enough on his plate trying to fix HP, without the added headache of also trying to repair Kodak.

Kodak on Monday gained 86 cents, to $27.62.

Comments

[David A:]

I would bet the story goes: HP takes out Kodak to get the camera brand name and to prevent them from messing up the inkjet ink price in the market. As Kodak gets desperate, they may continue to try to bring down ink prices which I have to believe has gross margin of ~98% and is a nice cash cow for HP they'd like to see continue. Seems like a bad rumor to me though.

2007 Oct 02 02:44 PM

[User 111196:]

What do you mean "Fix HP"? HP has grown greatly for the past 3 or so years. HP has passed IBM and is now the largest computer company. HP is larger than IBM with 1/2 the people. The stock is at a 52 week high. I think maybe we should give HP a little more credit than you are giving them. If they buy Kodak, it may be for patents, distribution channels or other reasons you have not considered.

2007 Oct 05 12:02 PM

[User 111196:]

What do you mean "Fix HP"? HP has grown greatly for the past 3 or so years. HP has passed IBM and is now the largest computer company. HP is larger than IBM with 1/2 the people. The stock is at a 52 week high. I think maybe we should give HP a little more credit than you are giving them. If they buy Kodak, it may be for patents, distribution channels or other reasons you have not considered.

2007 Oct 05 12:02 PM