Thursday, January 5, 2012

Blue Chips in the Red: Kodak

Part 2-of-2:
The company has few trump cards left, that may be strategically played to buy them just enough time to stage a come back. Kodak has intellectual property that gives them the ability to earned licensing fees from, amounting to nearly 1.9 billion over the past three years. Although it brought in only $27 million in licensing fees in the first half of 2011, they anticipate yielding over $340 million in the first quarter of this year. Nevertheless, there has been a shift in their strategy, as Associated Press reported that the company is trying to sell its patents, which are said to be valued somewhere in the area of $2 - $3 billion. This may be to stave off bankruptcy, or perhaps to sustain the company through a bankruptcy protection.

In the past decade, Kodak had taken steps to shift its primary business to meet the demands of the technology revolution. Kodak had invested hundreds of million of capital in a new software for workflow, in addition to new home printing products, particularly photo printers and commercial inkjets. The company was all set to surpass their breakeven-point in 2005.

The CEO, Perez, had high hopes that 2013 would be a turning point for them with their new line of inkjets, their licensing and workflow software, but it is clearly faced with a myriad of business concerns weighing them down. The Wall Street Journal reported that three of Kodak's Board of Directors resigned in recent weeks, and Kodak is preparing to file for chapter 11 in the coming weeks. With the resignation of nor one, but three board members, it seems that there may be a disagreement about what strategy to use to steer the company back to being a top contender in its field.

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