Shares of ill-fated Eastman Kodak
The company's market cap as of yesterday's closing price of $2.14 stood at $576 million. That would imply that its patents alone are worth more than five times the entire company's capitalization. The only reason the market is giving this outrageous idea any bit of credibility is Google's
It's true that Kodak's patents are about the only thing the company has left going for it, given its absolute lack of innovation and ability to adapt. It even sold a handful of them to image-sensor maker OmniVision Technologies
Patently offensive
Kodak announced last month that it is "exploring strategic alternatives" for its "1,100 U.S. patents that are fundamental to the digital imaging industry." That announcement came shortly after an International Trade Commission ruling that went mostly against Kodak in a case against Apple
Kodak’s patents are unquestionably valuable, particularly as recent patent disputes have escalated into full-out war. What remains highly questionable is how much they're worth, and how the company will realize the value there. Any suitor interested in the patents probably isn't interested in the company's losses or pension shortfalls.
I will answer your question with … another question
So are Eastman Kodak's parts worth more than the sum? Yes. But by how much? I believe the company is in a unique position to extract a premium for its patents in the current environment, but $3 billion seems a little far-fetched to me. That would be a dream come true for shareholders, but even that may not make up for all the sleep investors have lost over the past decade.
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- Add Research In Motion to My Watchlist.
- Add OmniVision Technologies to My Watchlist.