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Kodak all set to sell its imaging units

Kodak, the photography giant, is a very well-known brand. The company has been conducting bankruptcy proceedings for quite a while. For the first quarter of 2012, Kodak had reported a loss of whopping $366 million with total revenue standing at $965 million. The revenue has been down by 27 percent from the same quarter last year. This downward spiral of the company can be related to the fact that times have changed and nobody is using traditional films for cameras anymore as all have moved onto digital cameras, and thus Kodak’s film based business has turned out to be a disaster. The company does have some digital cameras in its lineup, however, the digital camera sales have also taken a nose dive (and it has stopped selling the same few months ago), and a one-time $61 million revenue cut from tax refund has just added salt in the wound.

The company has been big on cost cutting lately. Back in early February, Kodak decided to remove its name from Kodak Theatre. Kodak Theatre has been very popular for Academy Awards and has been a stage for not just Oscars but for so many Hollywood spectacles. The theatre sits at the Hollywood and is one of the biggest tourist attractions, but the imaging company was apparently paying $75 million just to have its name on the door, and that’s a lot of money for a company which is not able to afford paying its own employees. Smart move indeed.

Kodak filed Chapter 11 bankruptcy protection in January this year. Last time when the iconic brand returned some profit was back in 2007. Back in April, the company had decided to shed its digital camera business altogether. Later, it decided to sell some of its patents in an effort to pay back the creditors and emerge from bankruptcy, but things turned out to be bad after one of its major patents was ruled as invalid! The patent apparently brought in a lot of money for Kodak, where in which Samsung and LG have supposedly paid a combined total of $1 billion to Kodak for its use, and the imaging giant also has agreements with 30 other companies. The patent is related to preview of images, but when Kodak filed a suit against Apple and RIM for allegedly infringing its patents with the International Trade Commission, the judgment wasn’t in favor of Kodak as the judge failed to see the argument, and declared that patent was invalid, and neither RIM nor Apple had violated any trade laws. The judge did say that iPhone 3G and several of RIM’s devices indeed did violate Kodak’s patent, however, the “obviousness” of the idea made it invalid. Kodak has of course lost a lot of potential money that the patent could bring in as tablets that include cameras as well would also infringe its patent if it was valid and as a result, it won’t be able to squeeze licensing fees from manufacturers.

After the incident, the company failed to generate any interest in its patent portfolio. Kodak has been trying to attract a Stalking-Horse bidder, which is basically a company which bids a set amount in order to generate interest in auction. A Stalking-Horse bidder usually creates urgency with other bidders and increases the selling price of the stock in the process. The patent portfolio auction didn’t go exactly as the company had expected, and the bids that it received were lower than hoped for. Now, Kodak is forced to liquidate its other assets in order to emerge from bankruptcy.

Kodak has now announced that it is all set to sell its consumer film, photo kiosks, and commercial scanner businesses. Once the above units are sold, the company will be only left with inkjet printers and commercial film units. Kodak is said to receive assistance form Lazard Ltd and hopes to complete the sales in the first half of 2013.
Kodak’s commercial film unit deals with the movie industry. Apple claims that it owns some of Kodak’s patent as it worked with the company on a digital camera in the 1990s, however, courts have protected Kodak and prevented Apple from filing any suite against it. Kodak is said to be working on patent auction of two different patent portfolios. Apple claims the ownership of those two patents, but court has ruled in Kodak’s favor saying Apple had waited too long to proclaim its ownership.

The patent sale is generating quite a bit of interest, and 20 parties have apparently signed agreements to view confidential information before offering bids. According to sources, Kodak has so far received bids of around $150 million to $250 million, but Apple predicts the patents to be sold for around $2.6 billion.

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Company info: Kodak, an American multinational imaging and photographic equipment best known for photographic film products. In the 20th century, Kodak held a dominant position in photographic film, and in 1976 it had a 90% market share of photographic film sales in the United States. Kodak began to struggle financially in the late 1990s as a result of declining sales of photographic film and its sluggishness in transitioning to digital photography.

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