Eastman Kodak Shares Popped: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of embattled photography company Eastman Kodak (NYS: EK) surged 19% in early Wednesday trading on bullishness over its patent portfolio.
So what: According to MDB Capital Group, Kodak's digital-imaging patents could be worth about $3 billion (or five times worth the entire business), triggering plenty of takeover speculation among investors. It's no secret that the film photography specialist has struggled to stay relevant in the digital age, but given the voracious demand for intellectual property of late, Kodak's best move might just be to sell out to an innovation-hungry giant like Microsoft (NAS: MSFT) , Samsung, or Google (NAS: GOOG) .
Now what: I wouldn't get carried away in the optimism just yet. As my fellow Fool Rich Duprey noted yesterday, Kodak's board just approved a plan that would dilute shareholders if someone tries to acquire 4.9% of the company, effectively giving management the ground to "dig in to protect its own interests." Without the absolutely glowing prospects of a takeover, Kodak's heavy loss-generating main business and worrisome $1.2 billion pension shortfall just aren't worth being exposed to.
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At the time this article was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Microsoft. Motley Fool newsletter services have recommended buying shares of Google. The Motley Fool owns shares of Microsoft and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool'sdisclosure policyalways gets a perfect score.
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