The Worst Stock of 2010 Strikes Back

How did Eastman Kodak (NYSE:EK) respond to being crowned the worst stock of 2010? With blowout earnings and an immediate 25% share price jump, of course. Remember this day a year from now, when the real losers of the year have been revealed.

Ahem. Let's move along.

Kodak’s $2.6 billion of revenue was 6% above year-ago sales. Last year's $3.40 loss per share turned around to $1.36 of earnings per share from continuing operations. If Kodak's business is dead, the company never got the memo.

"Our momentum is returning, and our strategy is paying off," said CEO Antonio Perez. "We generated significant traction with our key digital businesses." And there's the touchstone: Digital photography may have killed Kodak's increasingly obsolete film-based business, but the company is adapting to become a force to be reckoned with in the digital age as well.

Kodak is swimming in shark-infested waters for sure, including Great Whites like Sony (NYSE:SNE) and Canon (NYSE:CAJ). And when nearly every cell phone is also a camera -- and Kodak doesn't make phones -- the once-dominant photography company also has to compete with newcomers like Apple (NASDAQ:AAPL), Motorola (NYSE:MOT), and Research In Motion (NASDAQ:RIMM).

Kodak has found niches to exploit in photo kiosks, inkjet printers, and professional graphics, and also sits on a valuable patent portfolio built from decades of cutting-edge research. And the company is prepared to ride out a few Category 5 storms thanks to $2 billion in cash equivalents outweighing $1.2 billion of long-term debt.

I think Kodak is going to be just fine, and the market seems to agree. Do you still think Kodak will crash and burn in 2010? Tell me off in the comment box below, then. I can take it.