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John Eastman is a writer, mixed media artist, and founder of several businesses ( ( over 25 years of hands-on business and entrepreneurial experience. He currently works and resides in a studio loft in Pittsburgh, Pennsylvania and NYC. Mr. Eastman... More
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  • Eastman Kodak Equals Rough Times Ahead 0 comments
    Aug 15, 2012 3:46 PM

    Eastman Kodak (EKDKQ) has been in bankruptcy proceedings since January of 2012, and trying to emerge from it by selling off the firm's patent inventory, has delayed announcing the outcome of its patent auction. In addition the company extended the auction, reportedly due to lower than expected bids, and continued discussions with bidders. This has been reported on multiple media sites as The Chicago Tribune Company. Officials did not specify the length of the extension period. The company is required to submit regulatory filings about the auction that include financial projections. Prior to the announcement of the extension, the company was intending to disclose auction winners on August 20th. The process that began earlier in August is a means to an end of the company's plan to save itself and emerge from bankruptcy.

    This article is a follow up of one written on August 9, on The Chairman's Blog titled "Eastman Kodak holds a digital patent yard sale while reporting financial results"

    Last week the Rochester, NY based firm reported a severe decline (27%) in revenue) but with Quarterly Earnings improving for its Commercial and Consumer segments by a combined total of $82 million while reporting a net loss of $299 million, compared to $179 million in the second quarter of 2011. On a good note was its cash balance of $1.257 billion.

    However, the firm was looking to the auction of its 1,100 patents to lift it out of bankruptcy and to bolster its cash reserves as it flushes out its operations further with expense reductions. This was viewed as a key component in their ability to not only emerge, but the continue on as a company. Reported on multiple media sites was the projected value of $2.2----$2.6 billion of the portfolio of digital imaging patents. Reportedly the initial bids from two potential buyer groups, each reportedly led by Apple, Inc. (NASDAQ:AAPL) and Google, Inc. (NASDAQ:GOOG), are said to have come in between $150 million and $250 million.

    Now as the auction period is extended, analysts do not see a positive picture emerging. If the amount of net proceeds from the auction is significantly lower, the company may have to file a new or significantly altered plan to emerge from chapter 11 proceedings. With a current quarterly loss as reported at nearly $300 million, the company could be in much worse financial condition than earlier perceived.

    Even with expense reductions, the losses will be tough to overcome in the next 12-18 months. This also does not take into consideration how research and development and new product offerings will be affected. The core reason that the 131-year-old company has struggled and fallen into a dire financial in the first place, was due to its inability to transform itself into a digital company from being a film photography company. New and imaginative products are needed to stay afloat in the ever-fast paced world of digital technology. Those products need funded in order to emerge. Eastman Kodak may survive but has a tough road ahead of it to do so. Based on recent news developments and the markets declining response of the past few days events, it looks like Eastman Kodak may be company of the past and not a forward thinking firm to invest in.

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