Eastman Kodak Shares Got Crushed: 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) plummeted 24% on Monday after borrowing $160 million against its credit line for "general corporate purposes."
So what: The film icon has been desperately trying to shift toward digital technology, but the news raises even more concerns over just how much cash it is burning through. Of course, Kodak tried to ease those fears by noting that "the purpose of the revolving credit facility is to bridge timing differences between cash outflows and inflows, which is a common practice at many corporations."
Now what: I'd continue to keep my distance from Kodak. The shares surged last month on reports that it was a perfect takeover target for behemoths hungry for intellectual property, such as Microsoft (NAS: MSFT) or Google (NAS: GOOG) , but today's news serves as a cold reminder of the company's still-shaky financial and competitive position. While Kodak still has the ability to sell a big chunk of its patent portfolio, the current cash burn is just too alarming for a long-term hold.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Microsoft and Google. Motley Fool newsletter services have recommended buying shares of Microsoft and Google, as well as creating a bull call spread position in Microsoft. 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's disclosure policy always gets a perfect score.
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