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Kodak (EKDKQ.PK) says it will stop selling inkjet printers to focus selling on ink as it...

Kodak (EKDKQ.PK) says it will stop selling inkjet printers to focus selling on ink as it continues to rework its bankruptcy plans. The company sees the move helping it to boost cash flow in the first half of 2013.
Comments (6)
  • HIS MONEY
    , contributor
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    Kodak also said this morning that it has received "significant interest" from potential buyers for it's Personal Imaging and Digital Imaging businesses.

     

    There is also the ongoing litigation in the Kodak v. ITC case concerning the validity of '218 patent. The ITC had ruled that at least one iPhone had infringed on said patent, but ruled against the patent's validity due to 'obviousness'. Kodak has appealed the ruling. One other issue is the pending summary judgement hearing scheduled for next TUE 10/02 concerning Kodak's sale ability of the remaining 8 Apple/Flashpoint contested patents. Favorable rulings in either/both cases would also bode well for Kodak's forthcoming POR as they would likely increase value of DI/KISS patent portfolios presently up for sale.

     

    Assuming Kodak's request for POR submission extension is granted, this will in my opinion bode well for existing common as extension will afford Kodak much needed time to complete asset sales and reduce workforce, OPEB, et al liabilities, which should greatly improve Kodak's solvency prior to submitting POR to emergence from Ch. 11.
    28 Sep 2012, 11:08 AM Reply Like
  • Seeker959
    , contributor
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    His Money,

     

    When Kodak says "this morning that it has received "significant interest" from potential buyers for it's Personal Imaging and Digital Imaging businesses." Do you think that they really mean it this time or is it more along the lines of the Patent sale that could fetch as much as $2 - 3 Billion dollars? I think thier imaging portfolio is weak and even if they got a decent selling price you'd still have to use the first $800 million or so just to pay off Citi and then the next 2 billion or so would have to cover the debt to their creditors and then you'd need a sustainable revenue of $66.4 million a month to cover the losses they seem to encur, or atleast that is the losses per month over the last 8 years.

     

    So for me, I think solvency for Kodak is not possible but your definition may be different then mine, I'm really only interested in the shares and their future value as if the debts are cancelled and the shared are cancelled and a new company rises from the ashes, well then kodak was never solvent, it was the new entity that was solvent.

     

    You are long on kodak and I respect that but how can you take a kodak statement as fact given the fact that they have fallen short on every aspect of their promises since 2008 when they did not complete the transition on time according to their master plan. If you are long on EKDKQ then good luck but I'd say taking all your money and throwing it in a fireplace and setting it on fire and then sifting through the ashes for unburnt bills will yield a better result.
    28 Sep 2012, 12:21 PM Reply Like
  • HIS MONEY
    , contributor
    Comments (67) | Send Message
     
    Seeker: You wrote "... then the next 2 billion or so would have to cover the debt to their creditors..."

     

    What gives you the impression that Kodak needs to pay down 2 BIL to creditors prior to exiting BK? Your assertion appears to be unfounded.
    28 Sep 2012, 12:47 PM Reply Like
  • Seeker959
    , contributor
    Comments (69) | Send Message
     
    Do you even read the financials that EKDKQ releases. You seem to think that Kodak is on solid footing and will just magically get out of debt but in the case of the pension plan in the US that is under funded by 25%, I think that alone is more than 1.5 billion but maybe the judge will allow Kodak to not pay back the pensions and just let the pensioners twist in the wind. Pensioners have no good reason to settle with Kodak at this point. They are retired and really don't care about Kodak's survival.

     

    Now maybe they won't owe 2 billion to creditors in the end but as of the end of 2011 they listed total liabilities as $6,576,000,000 and total assets of $4,226,000,000 so there is a shortfall there. Kodak has not sold an IP or products to the market in the last 12 months for greater than $40,000,000, they did say they'd get $2-3 billion for the IP but that failed, maybe this time is different if they can get $4 - 5 Billion for their imaging business then maybe the shares will be worth $5 but the odds of that happening are 0 and you know it.

     

    The SS Kotanic is sinking and while it's sinking Antonio is grabbing all the money from the onboard casino before he too jumps in a life raft. His raft is secure and even if others go down with the ship you can be damn sure Antonio will not.

     

    Do you think that the judge will give him until 2036 to complete the reorg as he may die of old age before the reorg completes.
    28 Sep 2012, 02:42 PM Reply Like
  • HIS MONEY
    , contributor
    Comments (67) | Send Message
     
    According to the most recent MOR, Kodak's "Liabilities subject to compromise" remain greater than 60 % of total liabilities at just over 3 BIL. Should Kodak successfully "compromise" with retirees, total liabilities should be greatly reduced. Kodak has yet to even cancel healthcare benefits for medicare eligible retirees. The MOR also indicates that Kodak presently has over 1 BIL in cash worldwide.

     

    Also according to WSJ article published yesterday, Kodak is:

     

    1) Presently working with potential financing partners to help them emerge from bankruptcy,

     

    2) Considering outsourcing production of the Prosper Print Presses or creating a joint venture with companies in Asia.

     

    3) Exchanging drafts of a deal for the patents with a consortium of buyer.

     

    Additionally, there is the pending sales for the PO and DI businesses, sales of 105,000 Kodak Kiosks, ongoing litigation in the Kodak v. ITC case concerning '218 patent validity, and pending summary judgement hearing in the Apple v. Apple case concerning additional (8) Apple contested patents.

     

    The story is a long way from over.

     

    Disclosure: I am long EKDKQ. All of the above is in my opinion, and based on facts as I understand them. Investors are advised to complete their own due diligence.
    29 Sep 2012, 08:27 PM Reply Like
  • Seeker959
    , contributor
    Comments (69) | Send Message
     
    Your Money, I would question your long position in EKDKQ stock, you may be right, kodak may emerge from BK if they "compromise" with all the parties but if part of the compromise is to issue stock in the new kodak then what will be left for shareholders, If I was trying to settle with Kodak and they offered $0.99 on the dollar, I'd be asking for the other penny in stock, If it were the difference between Kodak sewering and I get next to nothing vs. $0.99 then I guess I'd take the $0.99 but it won't be near that, the almost 1 billion in cash you speak of is $600 million subject to taxation if repatriated and the other $400 million is what's left of the Citi loan. So to say they have a billion is deceptive.

     

    Now as for the current business model, for the last 2 reported months they have lost money on goods and services sold. That number is prior to selling, marketing, management, interest, restructuring, R&D and other expenses. To me that means that Kodak would be better served to sell dollar bills for $0.99, They'd save on R&D, Sales and most other expenses but they'd still be losing money.

     

    As for all the commercial printing equipment they are installing, well I'd like to see out of all their installs what percentage have started making payments and are currently paying the service contracts, I understood by some of the hardware specialists and trainers that they were behind on sign offs as the customers delayed sign off to avoid the $25K per month service contract. The longer you avoid sign off, the longer you get the equivalent to a full service contract for free and in addition to that Kodak will keep flying in their guys week after week until they get sign off and that costs kodak approximately $3,600 per week, I did a quick napkin calc below and may be off by a few dollars but probably close as this would also explain why they can't even make money on goods or services sold.

     

    Employee Salary $1,500
    Airfare 600
    Hotel 500
    Meals 250
    Rental car 250
    Cell Phone and Internet 50
    Shipping Replacement Parts 250
    Other Expenses 200

     

    Good luck on your long position as I hope the shares go to $10 as I would benefit as a creditor but I will avoid the stock as there is little room to short it and I feel even less upside to EKDKQ before they turn this into a chapter 7 liquidation.
    2 Oct 2012, 10:43 AM Reply Like
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