Eastman Kodak Co. saw its shares drastically fall after hiring a restructuring advisory firm Friday.
The news that Kodak had hired the law firm Jones Day kindled fears that company may file for bankruptcy in the near future. Jones Day’s restructuring lawyers are known for advising companies during bankruptcy processes, but also handle a variety of other financial improvement situations.
The corporation lost 57 percent of its market value over the course of the week following the hiring news. Its capitalization fell from $468.2 million to just over $200 million at the start of the week.
“Kodak has been bleeding cash because of losses. They had to take out a line of credit for $160 million to help cover cash expenses, fueling the bankruptcy speculation,” said junior Accounting and Finance major Sean Krysic. “Restructuring does not always mean bankruptcy, but it does signal that they need external professional advice for a serious financial revamping.”
Kodak itself denies rumors that they are considering filing for bankruptcy. The company only has said that they are committed to meeting all obligations and are developing strategies for a financial turnaround.
Kodak has had trouble adapting to the modern marketplace since digital cameras and other advanced photography technology has become more common place.
“I don’t really think this comes as a surprise. Kodak has never really produced any strong digital cameras and has always seemed to be still stuck on film,” said junior broadcast Journalism student Eric Morrow.
The company is placing much of its future financial hopes in the potential of its patent portfolio. Kodak has raised close to $2 billion in licensing fees since 2008 and could potentially sell their 1,100 digital-imaging patents for as much as $3 billion.
Kodak, which is based in Rochester, NY, was considered the premier photography company for American consumers for many years. The company put out its first camera in 1888 and was officially founded by George Eastman in 1892.
Despite rises in stock value after reaching its lowest point, investors and analysts still remain bleak on the company’s future. The company has not made a profit since 2007.