Shares in Eastman Kodak jumped 55 cents, or 26 per cent, amid speculation that patents held by the 131-year-old pioneer of photography and digital imaging might be worth far more than the company itself.
Analysts estimate that digital-imaging patents owned by Kodak might be worth $3bn in a sale – more than four times the company’s market capitalisation at the market’s close on Wednesday.
The company, based in Rochester, New York, has reported losses in five of the past six years and its market value has slipped steadily since the 1990s, reflecting the company’s failure to capitalise on the shift from traditional film photography to digital imaging, a trend now accelerated by the inclusion of high-quality digital-imaging technology in the latest smartphones, including Apple’s iPhone.
Interest in companies such as Kodak, which holds extensive intellectual property portfolios, has soared after a series of recent deals highlighted the value of patents that could be used in an escalating “patent war“ between Apple and rival smartphone makers, including Samsung and HTC, which use Google’s Android operating system.
Last month, a consortium led by Apple paid $4.5bn for 7,000 patents owned by the now defunct Nortel Networks, while Google agreed to pay $12.5bn earlier this week for Motorola Mobility in order to obtain access to the company’s 17,000 patents, which it said would help it defend and extend “the Android ecosystem”.
Motorola Mobility’s sale came after Carl Icahn, Motorola Mobility’s largest shareholder, urged the company to investigate options to maximise the value of its patents.
Like Motorola, Kodak confirmed in a statement last month that it was exploring “strategic alternatives” for the more than 1,100 digital-imaging patents it owns, including those for processing, editing and storing digital images. The patents represent 10 per cent of Kodak’s US total, it said.
While analysts warned on Wednesday that Kodak has a $1.2bn pension shortfall, they also noted that potential buyers such as Microsoft or Samsung Electronics could both profit from its technologies, which are used in 85 per cent of digital cameras. These patents are believed to include one covering image-preview technology used in many digital cameras and smartphones.
Kodak has claimed Apple and Research in Motion, the Canadian maker of BlackBerry smartphones, infringed its patents and is seeking $1bn in licensing fees. Apple and RIM have both denied the claim. The dispute is due to be decided by the US International Trade Commission this month.