I wrote Wednesday’s Buzz column over on Big Daddy CNNMoney (I refer to this as our humblr Tumblr) about Eastman Kodak. And in just a day, a lot more has happened to justify this update.
Kodak’s stock has been in a free fall (out into nothing, to quote Tom Petty) for several years now. But up until recently, Kodak was still viewed as a once great company that’s now undergoing a difficult and painful transition. Its future may not have looked so bright that it needed to wear shades. (not Tom Petty) But there was a future.
Now it seems that Kodak is actually in a fight for its corporate life.
Ratings agency Fitch joined Moody’s late Wednesday and downgraded Kodak’s debt. That is raising fears that Kodak could default on its obligations. Fitch, like Moody’s, is skeptical that licensing deals and the sale of digital photography patents will be enough to reverse Kodak’s fortunes.
As if all that weren’t enough, a Kodak shareholder issued an ultimatum to the company. Sell or else! Investment Partners Asset Management, a Metuchen, N.J.-based firm that owns Kodak stock and convertible bonds, sent a letter to Kodak’s board, urging Kodak to find a buyer that “has resources to commercialize the company’s intellectual property more efficiently.”
In the letter, IPAM co-principal Gregg Abella wrote that “Kodak’s long-term performance is simply unacceptable, and as such it has not earned the right to remain an independent company.”
He went on to write that “Kodak’s management has been given more than enough time, and still has been unsuccessful in unlocking value for stockholders or bondholders” and appealed to larger institutional owners of Kodak to “immediately exert their rights, and take a leadership role in effecting change.”
Will that happen? Only time can tell. For what it’s worth, IPAM owned a little more than 50,000 common shares of Kodak as of mid-year, according to FactSet Research.
Unless firms like Legg Mason, BlackRock, State Street and Fidelity (to name a few that are still somewhat astonishingly long Kodak) put pressure on Kodak to sell, IPAM’s call may go on deaf ears.
But as I wrote in Wednesday’s column, it’s clear that Kodak still has some attractive assets. And even though they may be patents as opposed to products, someone should try their best to “develop” them into cash. And if the management team in Rochester can’t do it, then perhaps Abella is right. Another company should. — Paul