Is Eastman Kodak About to Ruin Its Business Model?

Evan Niu, The Motley Fool
Updated

Only hours after discussing the value of Eastman Kodak's (NYS: EK) patent portfolio, the Wall Street Journal reported that the company has indeed began shopping around for a potential buyer.

According to the Journal, investment bank Lazard has begun marketing the patent portfolio to potentially interested companies. The report even ventures that "one interested company is a large, strategic buyer in the wireless industry looking to use the patents for defensive protection." The stock is following up yesterday's 26% pop with as much as an additional 19% gain today.

It seems that Kodak took MDB Capital's $3 billion value estimate for its portfolio to heart. I'll give the company one thing: It has its timing right . Google (NAS: GOOG) really set the stage for putting premium valuations on patents. Considering that it just fired its own elephant gun, it may need time to reload, so I doubt the "interested company" cited is Big G.

Beyond that, the potential buyer really could be anyone. Apple's (NAS: AAPL) own elephant gun has plenty of ammo, and buying Kodak's patents could resolve Apple's continued dispute with the photography pioneer. Microsoft (NAS: MSFT) or Research In Motion (NAS: RIMM) might also fit the description of a "strategic buyer in the wireless industry."

Kodak CEO Antonio Perez said that the company will still be able to use its patents after a sale, but will no longer be able to litigate them. Considering that Kodak's business model has deteriorated into little more than patent trolling, giving up your ability to litigate really cripples your "operations."

As encouraging as the prospects of a juicy sale and a much-needed cash infusion may be, it remains sad that this is just about the only thing Kodak investors can look forward to.

At the time thisarticle was published The Motley Fool owns shares of Microsoft, Apple, Google, and Research in Motion.Motley Fool newsletter serviceshave recommended buying shares of Google, Microsoft, and Apple, and creating a bull call spread position in Microsoft and Apple. Try any of our Foolish newsletter servicesfree for 30 days.Fool contributorEvan Niuowns shares of Apple, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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