Wednesday, September 28, 2011

Kodak's New Funding Troubles

Only last month I wrote this post concerning Kodak's hopes of jumping on the patent sale bandwagon. At that point, the firm's stock price decline over five years was in excess of -50%. I wrote,

"If that chart is Perez' idea of a turnaround, I'd hate to see his notion of failure.

According to the charts accompanying the Journal's article, sales at the firm have fallen from slightly over $10B in 2006 to an expected less than $3B this year. Kodak lost money in each of the past three years and is forecast to do so again this year."

Then I read Tuesday's Wall Street Journal article concerning Kodak's shares losing "more than a quarter of their value Monday."

The current five-year price chart for Kodak and the S&P500 Index, seen above, now reveals the former to have lost more than 80% of it's value over the period.

Back when I wrote last month's post about Kodak, its market value was already judged by some analysts to have fallen below the value of its patent portfolio.

What changed?

Kodak drew down its bank credit line by $160MM. It has $75MM left on the facility.

A Kodak official said that the drawdown was because money earned overseas was not being repatriated. Whether true, or not, the reality is that Kodak has been a basket case since January of 2009. The S&P has risen steadily since then, while Kodak's equity price has been a roller coaster, ending down.

I'm not surprised to learn that CEO Perez' contract runs out in 2013. No wonder he's moving heaven and earth to keep the afloat a little longer.

I continue to believe, as I stated in prior posts concerning Kodak and Perez, that the firm should have been sold or liquidated long ago, to provide shareholders with some residual value. Now it may be too late for any significant value recapture.

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