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Its patent auction in limbo due to disappointing bids, bankrupt Eastman Kodak (EKDKQ.PK) is...

Its patent auction in limbo due to disappointing bids, bankrupt Eastman Kodak (EKDKQ.PK) is considering the sale of its document imaging (scanners + related software) and personalized imaging (photo kiosks, photo paper, still-camera film) businesses. Kodak, which wants to focus on enterprise solutions, has already announced plans to shut down camera production.
Comments (13)
  • Seeker959
    , contributor
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    You've got to be kidding, I bet the reorganization will take until 2016 or until there is finally no money left or until current management is fired.

     

    I really don't think there is anyone at Kodak that understands that the Kodak name isn't worth a heck of a lot. The Kiosks are decent but Fuji already beat them out of Walmart and is out pacing them in Sams Club. I think the Kiosks would be worth 50 million tops. The scanner business is a different story, I'd say there is almost no value in that.

     

    Why oh why does Kodak keep floating stories about how they can flog one of their products or divisions off to another company and reap untold fortunes in the process. Sounds like a 13 yr old is running the company now and says he'll be a millionaire before 30.
    23 Aug 2012, 07:31 PM Reply Like
  • HIS MONEY
    , contributor
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    Kodak is cutting the excess fat from the business. This should be viewed as a good thing. Monetization of the KISS/DIP portfolios, via sale or additional licensing, and proceeds from other pending asset sales, should assist Kodak in satisfying immediate debt obligations to Citi, et al, allowing Kodak to complete this metamorphosis from a large conglomerate of businesses to a more specialized set of business that Kodak will have decided are the most profitable.

     

    Per today's PR Kodak will still own and operate Commercial Printing, Enterprise Services, Consumer Inkjet, Entertainment Imaging, Commercial Film and Specialty Chemicals businesses.

     

    Ask yourself, how much of Kodak's 4.4 BIL in annual revenues is coming from the above listed business that Kodak will continue to operate? 2.5 to 3.0 BIL perhaps? Maybe more? How many profitable corporations with 2.5 BIL in revenues can you name that trade at .25 cents per share with a float of 280 MIL shares? The current market cap is ridiculously low here.

     

    Sure, the existing debt is a concern, but keep in mind that we know for almost certain that Kodak was offered .5 BIL dollars already for the patent portfolio, and that was PRIOR to the WSJ article had come out that alluded to the "unnamed" sources who confirmed that "it could not be learned" where the bids stood on that FRI. Keep in mind the auction had started on that WED and the WSJ article confirmed their sources only knew where bidding left off on that THU. The reason I find this important is, if the current creditors were concerned that Kodak would potentially be unable to satisfy their debt, then it seems likely they would have forced Kodak to take the .5 BIL they were allegedly offered. Again, this assumes that the highest bids Kodak has received were only received 1 day prior to the auction starting, which seems highly unlikely given the ongoing saga.

     

    At the end of the day, the fate of the existing common lies in the answer of whether or not Kodak is SOLVENT or INSOLVENT on the day the re-emerge from BK. Even at 1.00 per share, the market cap will be 280 MIL... so, what we need 280 MIL left over after creditors are paid in full? Considering the above listed business Kodak will continue to operate, asset sales, IP sales and licensing, continued restructuring efforts, along with possible changes in liabilities "subject to compromise" and we might just see that 1.00-2.00 PPS for each common share.

     

    All in my opinion, of course.
    24 Aug 2012, 08:23 AM Reply Like
  • Seeker959
    , contributor
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    Your Money, You seem to be ignoring the reality of total insolvency. The bondholders themselves already agreed to a program where Antonio Perez gets a multi million dollar payday in the event that their return is greater than 30%. As of the end of Q2 2012 Kodak showed equity of $2.957 Billion in the red, these are kodak's numbers not mine so if you put that on a per share basis it comes to -$10.49 so that is much less than the current $0.25 thus I am not a buyer of Kodak stock.

     

    If Kodak can shed all of it's legacy costs, settle with the creditors and Bondholders and sell off all the dead weight still in the company and manage to boost its profit margins on the product portfolio left behind as even after reorganization it seems that on a net basis they'd still be losing money as their margins are thin, then maybe they'd have a future but we aren't really discussing Kodak's future as you brought up that Kodak was a good buy at $0.25 but I'd say the stock being cancelled is close to a sure thing as we know someone will be taking a haircut during the reorganization and if a bondholder or creditor is not made whole then the shares would have to be cancelled or severely diluted.

     

    You also talk about all the patent revenue that Kodak makes on their patents but the patents are aging and from what I understand the only 3 holdouts that have not payed non-reoccurring royalties are Apple, HTC and RIM, RIM won't be around long enough to have to pay anything and if they do survive I'm quite confident that BB10 will not violate the patents in the same way thus kick off a whole new round of lawsuits. HTC, they may cave but as a minor player in the handset market I bet any possible settlement that may come would be less than 100 million as Samsung is 10X what HTC is and they only paid 900 million so if you discount the possible HTC win to 50% then it's worth a one time amount of $50 Million or at their current burn rate 10 days. Apple on the other hand is the big guy in the room, They seem to be hell bent on fighting Kodak and I guess the only thing that could be difficult for Apple is will they have enough cash to wait out Kodak. I think they only had about 120 billion in the bank at last count and are probably willing to spend double what they would have paid in royalties to destroy Kodak, they are vindictive that way. So when Kodak said between 2012-2016 they'd generate $6 billion in royalties and patent sales I think they were optimistic.

     

    So His Money although this is just my observations I'd urge you to buy whatever amount of stock in Kodak that you like but I think the probability of the shares 0'ing is huge but you may be right and Kodak may emerge from BK.
    24 Aug 2012, 09:24 AM Reply Like
  • HIS MONEY
    , contributor
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    Seeker959, I would challenge your assertion that Kodak was 2.957 BIL in RED at the end of Q2. As I understand it, Kodak's current DIP obligation is less than current cash on hand.

     

    Kodak is not anywhere near insolvent in my opinion.
    24 Aug 2012, 11:02 AM Reply Like
  • Seeker959
    , contributor
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    His Money, you must be right then. Kodak has $1.257 Billion in cash on hand and is burning $5 million a day so as of today lets say they burnt through $250 million since the last reporting. That leaves them with $1.007 Billion and the DIP spent thus far is about $800 million leaving them with a whopping $207 million in cash but they also have receivables of $824 million and another $625 million in inventory, not sure I trust an inventory # though as Kodak items are selling very cheap anywhere they do sell but that comes to $1.65 Billion after DIP. AP was $423 at Q2 end and long term debt at $1.434 or at this point a negative balance of $210 million and we haven't gotten to all the Other liabilities which on their Balance sheet was $4.735 Billion, I believe the DIP is rolled into that figure but the bottom line is when KODAK releases a statement stating their total equity is -2.957 billion then I'm inclined to believe they have access to their own numbers.

     

    If you are saying that they are solvent only because cash in the bank is greater then the DIP then I don't think you understand solvency or maybe I don't. To me if your debts on the books total more than your cash on hand you are at least in debt but if the total is equal to 9 months of future revenue or in the example you gave of a new company doing 2.5 to 3 billion then it's 12 months revenue then I assert that they are insolvent.

     

    Take a look at their income statement, they don't have 1 single department or division that didn't lose money in the first half of 2012, there was one item of $20 million that was not a loss but even removing restructuring charges every area lost money unless they are producing bogus filings.
    24 Aug 2012, 11:32 AM Reply Like
  • HIS MONEY
    , contributor
    Comments (67) | Send Message
     
    We all know Kodak has spent a significant amount of cash during the first half of 2012 for reorganization purposes. This should be viewed as an anomaly, and cash spending should attenuate as times goes on. As such, it is also reasonable to assume that a significant reduction in total liabilities would ensue as a result of said reorganization efforts.
    24 Aug 2012, 11:59 AM Reply Like
  • Seeker959
    , contributor
    Comments (69) | Send Message
     
    His Money,

     

    Kodak losses from 2005, the year Antonio came to work for Kodak.

     

    2005 - 1,660 million
    2006 - 804 million
    2007 - 208 million
    2008 - 727 million
    2009 - 233 million
    2010 - 675 million
    2011 - 767 million
    2012 - possibly 1,100 - 1,300 million

     

    So where is the anomaly, Kodak has been in transition since Antonio took the reigns and does not see profit on the horizon. I'm not saying Kodak will die or that all parts are junk but I am saying that ekdkq as a stock is worthless and just can't survive going forward and under current management should be through the transition by 2028 so long as the BOD and the Judge allows Antonio to continue to run this farce.
    30 Aug 2012, 09:47 PM Reply Like
  • TangoOscar
    , contributor
    Comments (377) | Send Message
     
    My dad still works for Kodak and he claims Apple is indeed holding up any and all processes it can.
    24 Aug 2012, 09:39 AM Reply Like
  • Seeker959
    , contributor
    Comments (69) | Send Message
     
    TangoOscar, If you were Apple and you had the ability to crush the competition wouldn't you... Apple has never been a nice company, they just make great products. Kodak has about 1 billion left and based on the current burn rate it'll last them just over 6 months so why not stall.

     

    It doesn't make it right but it does make it a fact.
    24 Aug 2012, 09:45 AM Reply Like
  • HIS MONEY
    , contributor
    Comments (67) | Send Message
     
    Should AAPL lose it's appeal, they will most certainly be forced to increase bid amounts. Moreover, if they lose the appeal, the ITC may reconsider the validity of Kodak's ownership of '218 patent. Should this transpire, as I understand it, AAPL would also likely owe Kodak 1 BIL in patent infringement fees.

     

    Again, all in my honest opinion.
    24 Aug 2012, 11:13 AM Reply Like
  • Seeker959
    , contributor
    Comments (69) | Send Message
     
    Apple owing Kodak a billion is a number tossed around by the community based on the Samsung $900 million but Samsung sold twice the handsets that Apple did so the number may be only $500 million if they win and Kodak has seemingly lost the momentum on the ITC rulings as of late but if Kodak prevails prior to closing it's doors then Kodak will be able to block the importation of iPhones into the US until a number is reached, could be 100 million could be 1 billion and it could be 10 billion, that is not up to the ITC to set a number, that's on Kodak and Apple.

     

    If Kodak wins right around the iPhone 5 launch then Kodak will do well but right now Apple is not selling as many phones until the new model so a judgement against Apple right now is not as devastating as it could be around the time of the launch.

     

    Bottom line is it's not cut and dry that if Kodak wins, Apple has to pay them X dollars per phone sold, the recourse Kodak has is only to block future sales of iPhones using the disputed patents. Kodak has everything to gain in the suit with Apple but Apple likely has little to lose as even a loss would be appealed on another basis and I hope you can at least agree with me that Kodak is currently burning cash and will eventually run out of burn money.
    24 Aug 2012, 11:41 AM Reply Like
  • mariohmp
    , contributor
    Comments (3) | Send Message
     
    That's a big "if", but I can visualize if Apple actually was found to owe Kodak for past villations, they would stall and appeal and keep this in legal limbo for years.
    27 Aug 2012, 09:36 AM Reply Like
  • Seeker959
    , contributor
    Comments (69) | Send Message
     
    Well I guess congratulations is in order for Kodak, they have hit a new low as of the end of July, US Revenue was $162,514,000 and Cost of Sales was $165,689,000 leading to a loss from the sale of goods of $3,175,000. This is only the loss from the goods themselves. Add in the Selling costs of $39,360,000 and the R&D spending of $13,539,000, well you get a total loss of $78,660,000 for the month of July but the big prize has to be awarded for not being able to even cover your costs on good sold.

     

    By every measure Kodak is now a total failure and the fact that ekdkq isn't at 0 blows my mind. I realize $3,175,000 is a small amount of money to lose but again it's on the goods and services you produced, how can you lose money on that, wouldn't they be better off to halt operations immediately to preserve some cash?
    5 Sep 2012, 03:22 PM Reply Like
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