Kodak Hopes Patent Sale Will Prevent Bankruptcy

By Joseph Mandour on October 31, 2011

Patent Portfolio Orange County – Eastman Kodak Company, the pillar of traditional photography, is hoping that a fire sale on its more than 1,100 digital-imaging patents will save it from a much speculated bankruptcy.

The 131-year old company based in Rochester, New York, actually invented the first digital camera in 1975, and the photo technology inside many cellular phones and mobile media devices was created by Kodak. However, with the majority of Kodak’s former revenue coming from the sale of film and photographic image processing tools and chemicals, nobody anticipated how fast the digital revolution would cause its decline. The world’s largest film manufacturer which popularized photography over a century ago, kept its eye on its old cash cow, and failed to quickly capitalize on the new digital era.

Forced by plummeting stock prices and a weak attempt to reinvent itself as a player in the digital industry, Kodak, beginning in July, has been hawking its portfolio of digital patents to raise enough cash to save the company. Some financial analysts predict the patent sale will earn Kodak $2 to $3 billion. Other analysts believe that Kodak can sell the patents for much more than that, mainly because many technology companies are looking to acquire patents in order to protect themselves from potential patent infringement litigation. Earlier this year, an alliance of technology giants including Apple, Microsoft, Research in Motion, and Sony, purchased a $4.5 billion patent portfolio from the now defunct Nortel Networks.

“The size of the (Kodak) deal could blow your socks off,” foresees Ken Luskin, a Los Angeles money manager whose Intrinsic Value Asset Management owns 3.8 million Kodak shares. Other financial experts concur with Luskin and say that with the bloody battle for global dominance of the smartphone industry, $3 or $4 billion is just a drop in the bucket for companies like Apple or Google. Analysts also agree that Kodak has one of the most desired patent portfolios out there.

Even if Kodak hauls in a sizable amount of cash for the patents, skeptics still paint a grim picture for the company, predicting that the sale won’t solve Kodak’s decade-long struggle to return to profitability after seven years of huge losses.

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