When Eastman Kodak (OTC: EKDKQ) filed for Chapter 11 bankruptcy protection in January, management wanted to avoid a total liquidation. Some Chapter 11 filers admit right away that they're unlikely to come back, but not Kodak. Some cost-cutting nips and tucks would team up with a pile of cash from a huge patent sale, and the company would be back on track in 2013.
But that optimistic vision is falling apart. Patent sales are no longer the no-brainer cash grab they once were, and Kodak can't find a volunteer to start off the bidding. Kodak's digital imaging patents are still on the auction block, because there's no way the company can survive without that Hail Mary, but the prospects for a billion-dollar windfall seem slim.
Now, Kodak promises to keep the names of bidders secret except for the eventual winner. Management says that 20 potential buyers have been kicking the patent portfolio's tires, but the proposed auction structure implies that none of them want to be seen thinking about Kodak's stuff. I imagine shady figures in trench coats, clutching their Kodak notes in plain, brown paper bags and sworn to absolute secrecy.
Kodak's case wasn't helped in the least when some of its most prized patents were declared invalid in a recent ruling. Apple (Nasdaq: AAPL ) and Research In Motion (Nasdaq: RIMM ) will probably walk away unscathed from that patent infringement lawsuit, even though the fallen film guru wanted $1 billion from Apple alone. If that's the best that Kodak's finest patent holdings can do, there's little reason to pay top dollar for the other 1,100 documents on the table.
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