Kodak Picturing A Big Patent Sale

The company will be all smiles if its patents fetch an estimated $3 billion.

Image: Kodak

Kodak isn’t worth what it used to be, at least according to its dwindling market value. But the company’s patent portfolio—now that’s a different story.

Eastman Kodak Co. has started shopping its digital imaging patents around to potential suitors in hopes of capitalizing on the current bull market for intellectual property, according The Wall Street Journal.

The 131-year-old camera company, which once held a market value topping $30 billion, slipped in the past two decades as film photography faded and, more recently, smartphones squelched demand for digital cameras. The company has reported losses in five of the past six years and currently has a market capitalization of less than $600 million.

But Kodak's intellectual property is where we find its true value. After Google gobbled up Motorola Mobility and its 17,000 patents for $12.5 billion earlier this week, MDB Capital Group estimated Kodak’s portfolio of digital-imaging patents—which account for a mere 10 percent of the company’s intellectual property—would fetch around $3 billion in a sale. That’s more than five times the company’s current market value.

“Kodak is the lowest hanging fruit out there,” MDB Capital CEO Chris Marlett said, adding that the patents “could go for a huge number.”

Investment bank Lazard Ltd., which advised Google during its recent acquisition, began marketing the Kodak portfolio to potential buyers this week and has reportedly received interest from at least one wireless company looking to use the patents for defensive protection.

Kodak CEO Antonio Perez and several industry analysts have said they believe the portfolio would be particularly valuable for tablet makers, who need a separate license to use the company’s image-previewing technology, even if they already license the technology for their mobile phones. In the event of a sale, Kodak would still be able to use the patents, but the lucrative licensing rights would go to the buyer.

Get more business intelligence from Portfolio.com:

• A&F: Here's the Situation, No More Clothes: Abercrombie is raising tanned eyebrows on the Jersey Shore for offering MTV's Michael “The Situation” Sorrentino an undisclosed sum of money to stop wearing its clothes. But analysts smell a publicity stunt.
• GM Revs Cool Factor With Startups: General Motors is out to show the world that the automaker once dismissed as an industrial dinosaur has gained some Silicon Valley cool just two years after its bankruptcy.
• Smoke Shoots Out Cigarette Makers' Ears: The crackdown on cigarettes has tobacco companies in rebellion mode. Several major U.S. cigarette manufacturers have filed suit in protest of graphic warning labels, and Native American entrepreneurs are rolling out more of their own tax-free smokes.