An uncomfortable suspicion that an icon of US business may have no future pushed investors to dump stock in Eastman Kodak Co on Wednesday.
The ailing photography pioneer’s shares fell to a new all-time low after the Wall Street Journal reported that Kodak is preparing for a bankruptcy filing “in the coming weeks” should it fail to sell a trove of 1,100 digital-imaging patents.
Analysts have said the patents could fetch US$2 billion to US$3 billion, but no takers have emerged since Kodak started shopping them around in July.
In November, the 131-year-old company said it could run out of cash in a year if it didn’t sell the patents. Even as it looked to a future rooted in its emerging printer business, the company was reporting a third-quarter loss of US$222 million — its ninth quarterly loss in three years — and it said its cash reserves had fallen 10 percent in three months.
Now, Kodak finds itself in a state of suspended animation.
Kodak’s shares tumbled US$0.18, or 28.2 percent, to close at US$0.47 on Wednesday and continued falling after hours. They hit their previous trading low of US$0.54 on Sept. 30 when word leaked that Kodak had hired a law firm that advises companies on bankruptcy and restructuring options.
In the dozen years before last year, the company had lost more than 95 percent of its value as it was pummeled by foreign competition and then shaken to its core by a digital revolution. It launched the plan to sell off key assets as its shares fell another 80 percent last year, having started the year at about US$3.
“It feels like water torture,” said Mark Zupan, dean of the University of Rochester’s Simon Graduate School of Business Administration. “The game hinges on that [patent] sale, principally. And, at this point, they just have to create the insurance if they’ve got to go the other route. But the prospect of bankruptcy makes the sale more complicated too.”
The New York Stock Exchange warned Kodak this week that its shares would be delisted — or dropped from the exchange’s listings — if they stay below US$1 for six more months.
The Journal said Kodak is in discussions with potential lenders for around US$1 billion in loans called “debtor-in possession financing” that would keep it afloat during a bankruptcy process.
The newspaper said a bankruptcy filing could occur by early next month.
A Kodak spokesman said the company does not comment on rumor or speculation.
Since 2005, Kodak has poured hundreds of millions of dollars into new lines of inkjet printers that are finally on the verge of turning a profit.
Home photo printers, high-speed commercial inkjet presses, workflow software and packaging are viewed as Kodak’s new core.
Revenue from those businesses rose by a combined 13 percent in the third quarter, and Kodak said it expected the consumer printer to become profitable in the October-December quarter, typically the period that generates the bulk of its revenue. Kodak reports its fourth-quarter results on Jan. 26.