Tallahassee, FL 11/3/11 (StreetBeat) -- In its 3Q report, Eastman Kodak (NYSE: EK) Thursday signaled that its earnings are declining faster than it can engage in patent sales to raise much needed capital - and executives told investors to expect the trend to continue.Eastman Kodak reported earnings that showed its cash fell nearly 10% to $862 million, its loss widened to $222 million or 83 cents a share and that quarterly revenue fell 17% to $1.46 billion, missing analyst estimates surveyed by Bloomberg.
In late September, the Rochester, New York -based company borrowed $160 million in September and has hired law firm Jones Day and investment bank Lazard to provide advice on asset sales and restructuring possibilities - its stock also plummeted at certain points during the quarter when bankruptcy rumors circled. Today's earnings signal that while its business losses and cash burn accelerated, the company is still confident in the proceeds it can raise from intellectual property asset sales.
Company shares fell 2.5% to $1.17 in pre-market trading. The company's stock fell as low as 54 cents a share at the end of September when Bloomberg reported that the digital imaging and camera maker may consider a bankruptcy. They've since recovered but are still down nearly 80% year to date.
"We now expect to end the year with as much as $1.4 billion in cash, before any proceeds from the sale of our digital imaging patent portfolios, reflecting the company's seasonal generation of cash in the fourth quarter," said Kodak chief executive Antonio Perez in the company's earnings announcement. He added, "Remember as well that the eventual sale of our digital patent portfolios will materially increase our cash balance and help to accelerate our efforts to complete the transformation."
Previously Perez had targeted ending the year with as much as $1.7 billion in cash. The company also guided investors to expect increasing losses as high as $400 million for 2011, more than doubling its expectations for losses from continuing operations before interest and taxes. It also tempered annual revenue expectations to be as much as $6.4 billion from $6.7 billion a year earlier. For the rest of the year, Eastman Kodak continues to expect to sell between $250 million and $350 in from intellectual property licenses and another $200 million from other assets. The company's year-end cash expectations were lowered as a result of its wider expected operating loss.
Digital-imaging patents owned by Kodak could fetch as much as $3 billion, according to a previous estimate MDB Capital Group, particularly in light of mergers earlier this year like when Google acquired Motorola Mobility Holdings at a hefty premium, largely for its trove of 17,000 patents. Nortel also sold $4.5 billion worth of patents and intellectual property in July to a consortium of tech giants including Apple and Research in Motion.
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