Kodak Betting On Digital Printing
Jan. 19 (Bloomberg) — As Eastman Kodak Co. investors bet the 131-year-old photographic pioneer was headed for bankruptcy, the company decided Chapter 11 was the simplest way to become the digital printing specialist it aspires to be.
Bankruptcy allows sales of the photography divisions and patents Chief Executive Officer Antonio Perez wants to jettison to pay off legacy employee benefits and creditors, as he focuses Kodak on faster, flexible commercial and consumer digital printers and the company’s superior ink. Its trove of 11,000 patents could fund expansion by allowing the company to sue for more licensing fees — a move it has pursued more aggressively in recent weeks.
Efforts to turn Kodak into a company that makes sophisticated printers for the publishing, packaging, and advertising businesses have burned cash. Raising funds from intellectual property stalled amid delays in a royalty battle with Apple Inc. and Research In Motion Ltd. Would-be asset buyers shunned deals because of concern that sales made before a Chapter 11 filing would be scrutinized in court for signs that Kodak was fraudulently transferring assets cheaply. Now that the filing has been made, that worry is gone.
“This is a melting ice cube of a business,” Amer Tiwana, an analyst at CRT Capital Group LLC in Stamford, Connecticut, said before the filing. “When you’re staring at a situation like that, it’s typically better to go ahead and deal with it rather than close your eyes and hope that the situation will somehow miraculously improve.”
