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.

Back to Home Page

K. Reilly
The Cohn-Reilly Report

Check out the new Music and Art Forum on BlogSpot! "Its a refreshing departure from economics...... it's like life's little desert snack."doARTorDIE

Dangerous Liaison: Goldman, Zuckerberg and Facebook

The alliance that rocked the investment community, is making new headlines as the dust settles on the $450 million transaction. The awe inspiring transaction that made Mark Zuckerberg’s net worth more than triple, was structured to take advantage of loop holes in the SEC regulations to raise capital for Facebook. The SEC’s regulatory concerns were entirely justified, but may have been egged on by the media attention to the Goldman continued above-the-law attitude. According to the SEC regs, corporations with more than 499 investors must disclose their financials to the public. To circumvent this provision, Goldman’s bankers have set up a ”Special Purpose” vehicle which establishes Goldman Sachs as the fund manager, and sole investor. The sole investor of record could then seek to pool outside investments.

Initially the small investors were shunned, since Goldman opened the Facebook financing exclusively for its wealthiest clients, seeking larger denominations. The (clearly unwanted) attention to the behind the scenes deal has sparked a new ripple in this financing. Now, it appears that US investors are being left out all together. At this juncture, it is reported that no U.S. investor will be afforded the opportunity to invest in the transaction – large or small. This is probably one of the most sought after investment of the decade – for those who are serious players in the investment community, this is the transaction of a lifetime, and now is the Facebook shares have been taken off the U.S. market. Goldman seeks to avoid the glaring eyes of the SEC by looking overseas for their investors.


K Reilly
The Cohn-Reilly Report

Verizon Gets the iPhone

The long awaited news finally came today, announced in a joint meeting with Apple in New York City. This will end AT&T’s three plus years of strong growth driven by its monopolistic hold on the iPhone.Verizon will start shipping to customers as early as February.

Many analysts expect AT&T to lose contract customers this quarter without a powerful, unique incentive to lure subscribers.The operator also suffers from a perception that its wireless network is ill-equipped to handle iPhone users' heavy data usage. AT&T could lose up to 3.5 million customers, although it will take time for that to happen due to contractual obligations. AT&T will also face additional pressures from Verizon Wireless, which may offer new iPhone customers the same privileges all of its smartphone customers enjoy: unlimited wireless data usage for a flat monthly fee.

Verizon will initially take a hit on its Earnings Per Share, due to the subsidy it will incur for the iPhone. However, in the long run it will profit greatly from the increased customer base. Overall, a great coup for Verizon.

C. Cohn
Cohn-Reilly Report

Telecom Earnings Update

AT&T earnings beat the Street by 4 cents -.54 actual earnings Per Share versus the expected .50.

- Revenues - $30.9 billion for the period. - Two million increase in total wireless subscribers - highest third-quarter net gain in the company's history. - 4.3 million postpaid 3G integrated wireless devices added to AT&T's network, the largest quarterly increase in the company's history; integrated device growth included 3.2 million iPhone activations. - 33.6 percent increase in wireless data revenues to $3.6 billion. - 240,000 net gain in AT&T U-verseSM TV subscribers — up from 232,000 added in the year-earlier third quarter — to reach 1.8 million in service. - 18.7 percent growth in wireline IP data revenues driven by AT&T U-verse expansion and growth in advanced business products. - $9.7 billion cash from operating activities in the third quarter and $25.5 billion year to date."

Back to Home Page

C. Cohn
Cohn-Reilly Report / News Flash