(EK) Eastman Kodak Announces Patents for Sale

Eastman Kodak Co. (EK) has put a portfolio of its patents on digital imaging, up for sale. The move entails attracting potential buyers and converting the company’s intellectual property into cash. Kodak’s digital-imaging patents are estimated to worth $3 billion, of late.

In July, Kodak announced selling 1,100 patents on digital imaging equivalent to about 10% of its portfolio. The patents may include one that protects image-preview technology used in cameras. The company hired Investment bank, Lazard Ltd, to search for “strategic alternatives” for the patents.

Lazard thus began marketing Kodak’s patents portfolio, targeting a large, strategic buyer in the wireless industry. The name of the potential buyer has not been disclosed yet.

There has always been a tough contest for patents in the technology world, as companies seek to use such patents to ensure a competitive edge over its competitors. Since 2008, Kodak generated almost $2 billion in licensing fees and royalties from intellectual-property battles, through negotiations and court cases.

Yet again, Kodak claimed that Apple and Waterloo as well as Ontario-based Research In Motion Ltd. (RIMM) infringed its intellectual property (IP), trying to extract $1 billion in licensing fees. Kodak alleged that the camera features on Apple and RIMM made Blackberry phones infringe on some of its patents.

Kodak shares jumped on speculation that the company’s digital imaging patent portfolio could be a valuable addition to the IP holdings of the mobile phone giants such as Google, Apple, Microsoft, HTC, Samsung etc.

The company, operating in global photographic and graphic communications markets, directly competes with its peers, such as Canon Inc. (CAJ), Sony Corporation (SNE) and FUJIFILM Holdings Corporation (FUJIY.PK).

We currently maintain a long-term Neutral recommendation on the stock. Kodak has a Zacks #3 Rank, which translates into a short-term Hold rating (1-3 months).

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