There’s nothing more painful than watching a once-mighty company fade away. Eastman Kodak, once synonymous with the business of photography, was late to the digital camera craze and paid the price. The stock has plunged from a high of over $80 a share in 1996 to less than $5 now. Kodak was booted out of the Dow Jones industrial average in 2004 and with a market value of barely over $1 billion, it was ignominiously kicked out of the S&P 500 late last year too.
The news isn’t getting any better. In a developing (pun about old-school spools of film intended) story, Kodak shares were down nearly 14% Tuesday after the company disclosed late Monday that a judge in the U.S. International Trade Commission (ITC) ruled that a patent infringement claim Kodak filed against smartphone giants Apple and Research In Motion regarding technology for previewing images on digital camera-enabled devices was “invalid.”
The case is not officially closed. The full ITC is expected to issue a ruling by sometime in mid-to-late May. But investors clearly are not pleased with Monday’s outcome.
The company is trying to transform itself into one that relies more on intellectual property licensing revenue and less on sales of cameras and other devices. Kodak does have deals with other gadget makers, such as LG, Motorola, Nokia and Samsung to name a few.
Trey Hays, a manager with Hodges Capital Management, a Dallas-based investing firm that owns Kodak, said he was a little surprised the stock fell as much as it did Tuesday. But he conceded that the ruling was not good news and could be a blow to Kodak’s hopes for a brighter future.
Kodak needs all the help it can get. It reports fourth-quarter earnings on Wednesday and analysts are forecasting a loss on the back of a 17.5% drop in sales. Hays said that his firm will be watching results closely in order to figure out what to do with the stock. — Paul