Kodak Sells Film Business: Company’s Silver Up For Grabs?

Eastman Kodak announced Thursday that it is eyeing an end scene to its print film, photo paper, photo kiosk, commercial scanner, heavy-duty commercial scanners and corporate software divisions, as it looks to sell them. The move comes on the heels of chapter eleven bankruptcy this past spring, and as the business auctions off its portfolio of digital patents. The move was expected, but not until the beginning of the year. The company said that it is selling a business unit which includes its “traditional photographic paper and still camera film products.““The initiation of a process to sell the Personalized Imaging and Document Imaging businesses is an important step in our company’s reorganization to focus our business on the commercial markets and to enable Kodak to accelerate its momentum toward emergence,” Kodak Chairman and CEO Antonio M. Perez stated. “In addition, we continue our initiatives to reduce our cost structure and streamline our operating models in an effort to return the company to profitability.” He went further to state:

“We are reshaping Kodak. We continue to re-balance our company toward commercial, packaging and functional printing — in which we have the broadest portfolio solutions — and enterprise services. These businesses have substantial long-term growth prospects worldwide and are core to the future of Kodak. We are confident that our competitive advantages in materials science and deposition technologies, as well as our know-how in digital imaging, will enable us to capitalize on those opportunities and extend our leadership in key growth markets.”

The pressure remains on Kodak, a company that is a part of the Silver Users Assocation, and has developed business relationships with big industrial miners so as to buy the silver needed for photography film, for example, directly from the source. The Silver Users Association is basically a group of big corporations who have formed an alliance based on their mutual dependence on silver. On the Silver Users Association website, the group touts Kodak:

…the Eastman Kodak Company has led the way with an abundance of new products and processes to make photography simpler, more useful and more enjoyable. In fact, today’s Kodak is known not only for photography, but also for images used in a variety of leisure, medical, business, entertainment and scientific applications. Its reach increasingly involves “infoimaging.” Infoimaging is the use of technology to combine images and information–creating the potential to profoundly change how people and businesses communicate.

Just as Eastman had a goal to make photography “as convenient as the pencil,” Kodak continues to expand the ways images touch people’s daily lives. The company ranks as a premier multinational corporation, with a brand recognized in virtually every country around the world.

…And then Wall Street turned on Eastman Kodak. As I wrote about the Kodak bankruptcy in the spring:

According to Bloomberg News, Eastman Kodak consumes approximately 8.5 million ounces or $300 million worth of silver each year for its manufactured goods and supplies. This is a sufficient amount of silver to put pressure on the silver market considering inventories at the COMEX are purported to be around 35 million ounces of unallocated silver.

Sprott Asset Management had communicated with investors just days before the Kodak bankruptcy informing them Sprott’s Fund has raised enough money to take delivery of ten million ounces of silver. The big question is, from where would they take this silver delivery?

The Kodak bankruptcy will be handled by a specialist from FTI consulting, Dominic Di Napoli, who has worked for JP Morgan and Goldman Sachs.

The silver investor understands the irony in a former JP Morgan employee handling the bankruptcy of a company who not only demands many ounces of silver for their products on a annually basis, but also one which very likely has stockpiles of the metal considering ten years + of rising prices.

Could JPMorgan get lucky again, in the wake of MF Global, by inheriting Kodak’s silver? The firm is already lucky to be alleviated of Kodak’s silver demand, to be sure.

At the time of its bankruptcy, Kodak said it had $5.1 billion worth in assets. How much of this $5.1 billion is in the $1 billion annual silver market?

“We have to make some tough choices to build our future and this is one of those choices,” Perez told Bloomberg Businessweek. “Kodak’s goal is not simply to emerge but obviously to emerge as a profitable, sustainable (emphasis mine) company and today’s actions are moving us decisively along that path.”

Was Kodak’s silver simply not sustainable with meridian world silver demand? Peculiar timing, as silver breaks out of a technical downturn and greenshoots begin springing from the poor man’s gold’s USD price.