Eastman Kodak: This Stock Is Probably Going to Zero

You'll be seeing plenty of stories detailing Eastman Kodak's (EK) bankruptcy filing, how the company got to this point, and speculating about what will happen next. My advice is simple: Stay away from this stock if you know what's good for your portfolio.

The photography pioneer's decision to enter into Chapter 11 bankruptcy protection came as no surprise. The cash-strapped and recently profitless icon had been circling the drain for months. Kodak was down to selling patents and assets to raise money in a desperate garage sale. The Wall Street Journal reported that the company was bringing in a chief restructuring officer just before the Thursday-morning bankruptcy filing, and that's a post that is created solely for the intention of preparing a fiscal surrender.

Gambling in the Darkroom

Speculators will be tempted in the coming days to nibble on Kodak's shares. A bankruptcy filing doesn't halt trading in a company, though the ticker symbol changes to reflect its filing state.

That sort of investing is a losing game.

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More often than not, any type of bankruptcy will wipe out the common stockholders. It may not seem that way during the coming weeks. The low price and the heavy volume will convince some to take a chance, because obviously, other people are buying. Some will argue that filing for a reorganization -- and not an outright liquidation in Chapter 7 -- implies that the company will live to see another day.

There will always be exceptions to the rule, but the smart money has to be on Kodak's common stock being retired worthless in a few weeks or months. Keep in mind that creditors will need to be satisfied before common shareholders get to the head of the line, and there's rarely anything left after corporate lenders are willing to take pennies on their borrowed dollars.

Kodak has a rich long history, but that doesn't matter today. Kodak is rich in intellectual property and assets, but those may very well belong to the secured creditors by the time that the company emerges from bankruptcy with a new ownership structure. Read up on the fate of bankruptcies in the past. Folks buying the common stock are usually -- though not always -- wiped out.

Digital Killed the Photo Film Star

Facebook killed Kodak as we know it. Your smartphone and digital camera killed Kodak. The company that rose to fame with its film and photofinishing services isn't as necessary these days. Small flash memory cards and internal gadget memory are the new rolls of film. There's no need to print photographs when they can be blown up on PCs and tablets, and shared on social networking websites for all to enjoy.

Kodak made the best of its situation, moving into areas that seemed more stable, but it was really just a matter of time. The path to profitability at this point seemed unattainable.

We'll see what Kodak looks like when it emerges from bankruptcy later this year. Its balance sheet will be more agreeable. It may be a smaller company after creditors hack away at its assets. However, if you take a before and after picture of Kodak's stockholders, they will probably be entirely different sets of investors.

Be smart. Don't blink when you see the flash go off.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article.