Eastman Kodak Divests Insignificant Division, Muddles Management Structure, Stock Jumps 20%

by: Inelegant Investor - December 23rd, 2011   6 Comments

(EK) was once synonymous with photography and imaging. Today, like the abandoned subwayin its home town of Rochester, it stands as a hulking relic testifying to the lost hopes and dreams of a bygone era.  ’s

The logo from 1987 to 2006. "Evolution of...

moments are now but a series of shadowy images of past glory wafting away.  This afternoon, the company issued two press releases.  The first, announcing an agreement to sell Eastman Gelatine for an undisclosed amount, stated that it was

consistent with its previously announced intention to sell non-core assets to sharpen the Company’s focus on its digital growth initiatives and accelerate Kodak’s transformation to a digital company

It’s a good thing the visionaries at Kodak have recognized the future is digital and have decided to sharpen their digital focus and accelerate their transition to digital. If only it were 1995! The company sold a minor division with just 95 employees for an amount it chose not to disclose, nor did it disclose any details about the division’s revenue nor profitability. In short, this is an immaterial event that has little impact on Kodak’s fight to remain solvent.

The second announcement, which was quite brief, noted the election of , currently General Counsel, as President.  What about , the current President? No problem, he’s also President. No doubt Kodak noted how effective it has been for (RIMM) to have co-CEOs and decided to emulate that company’s stunning success.  CEO Antonio Perez noted that the move reflected the strategic importance of the company’s intellectual property.  Kodak has 3 towering legacies: a brand synonymous with photography, a wealth of patents covering imaging technologies, and a crippling pension obligation.  The company invented much of modern imaging yet was slow to transition to the new world and gave up leadership to others. The market holds out hope regarding the value of patents and today’s 20% jump after hours is clearly a reaction to Ms. Quatela’s appointment as President.  Even in this act, the company has proved tentative, keeping Mr. Faraci in place.  This lack of decisiveness and vision led to the company’s spiral downwards, and it may eliminate any chance the once-great company has of voiding bankruptcy.

Disclosure: The author holds no position in any stock mentioned

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  • TruthSeeker2012

    You’re a clueless fool who obviously hasn’t looked at the maturity of the company’s debt, and don’t understand the legal implicatiosn of the sale allaying the concerns over fraudulent conveyance with respect to the imminent patent sale. Do some homework before posting BS on your blog and making a fool out of yourself. 

    • http://www.inelegantinvestor.com Inelegant Investor

      Please don’t tease us. Elaborate. Despite the rudeness and crudeness of your comments(which you posted under two different names with a bogus email), I’ll allow them to stand, but in exchange, I request that you, in a civil way, give us the bull case. If you want, I’ll even post it as its own post. The basic facts are simple though:
      1) The company’s current business is an unprofitable mess
      2) The company’s only hope is monetizing its patent portfolio for more than its pension liabilities

      So far your behavior has been that of a troll. I’ve given you a platform, make your case with ideas and facts, not with name-calling, deception and ad hominem attacks.

  • Xxx

    So many twitter stream hacks who think it’s fashionable to spout “Kodak going bankrupt” when in fact they have done no research whatsoever into the company. Pathetic and shameful.

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