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Bankruptcy protection: Kodak makes moves to stave it off

Kodak may file for bankruptcy protection, as analysts wonder if the company will find a buyer for its trove of patents. Bankruptcy protection could hit 'in the coming weeks,' according to one report.

By Ben DobbinAssociated Press / January 5, 2012

Bankruptcy protection for Kodak? Could be coming soon, according to reports. In this Oct. 3, 2011 file photo, Kodak headquarters is shown in Rochester, N.Y.

David Duprey/FILE/AP

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ROCHESTER, New York

An uncomfortable suspicion that an icon of American business may have no future pushed investors to dump stock in Eastman Kodak Co. Wednesday.

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The ailing photography pioneer's shares fell to a new all-time low after the Wall Street Journal reported that Kodak is preparing for a bankruptcy filing "in the coming weeks" should it fail to sell a trove of 1,100 digital-imaging patents.

Analysts have said the patents could fetch $2 billion to $3 billion, but no takers have emerged since Kodak started shopping them around in July.

In November, the 131-year-old company said it could run out of cash in a year if it didn't sell the patents. Even as it looked to a future rooted in its emerging printer business, the company was reporting a third-quarter loss of $222 million — its ninth quarterly loss in three years — and it said its cash reserves had fallen 10 percent in three months.

Now, Kodak finds itself in a state of suspended animation.

"Everybody has a sinking feeling," said Ulysses Yannas, a Buckman, Buckman & Reid broker in New York. "It's possible they can file for bankruptcy protection. Yet I don't think it's probable — principally because the need for cash is not imminent."

Kodak's shares tumbled 18 cents, or 28.2 percent, to close Wednesday at 47 cents and continued falling after hours. They hit their previous trading low of 54 cents on Sept. 30 when word leaked that Kodak had hired a law firm that advises companies on bankruptcy and restructuring options.

In the dozen years before 2011, the company had lost more than 95 percent of its value as it was pummeled by foreign competition and then shaken to its core by a digital revolution. It launched the plan to sell off key assets as its shares fell another 80 percent in 2011, having started the year at about $3.

"It feels like water torture," said Mark Zupan, dean of the University of Rochester's Simon Graduate School of Business Administration. "The game hinges on that (patent) sale, principally. And, at this point, they just have to create the insurance if they've got to go the other route. But the prospect of bankruptcy makes the sale more complicated too."

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