Eastman Kodak Company (NYSE: EK) is trading higher in the after-hours on news that it has completed the sale of its Image Sensor Solutions business to Platinum Equity.  Our question is simple: Is Eastman Kodak giving its future away?  It may seem extreme, but this has been such a disappointing situation that it is more than fair to ask.

So, our question comes on the heels of a 2.6% gain today and also a 5% move higher in the after-hours.  The company claims that the move “will sharpen Kodak’s operational focus and strengthen its financial position.”  We have to take the company’s word on this because it noted, “While the financial details were not disclosed…”  So far the company only hinted at raising cash in the transaction. 

An actual quote noted, “This sale maximizes shareholder value by obtaining a full and fair valuation for this business, and allows Kodak to increase its financial flexibility.” Trusting a company like Kodak is not exactly an easy sell any longer and it would have been better for shareholders to just know exactly what they were getting here. What Kodak is trying to show is that it will have access to the image sensor technology involved and can use it in Kodak products.

Kodak went on to say that it “has previously communicated that it would sell assets that are not central to its transformation to a profitable, sustainable digital company.”  That may be patents as well, but we will only take one sale at a time when confirmed in a press release. 

The Image Sensor Solutions business claims to encompass “the world’s highest performance solid state image sensor devices.”  Imaging applications have been in precision manufacturing inspection to digital radiography, from earth imaging satellites to traffic monitoring, and from the world’s highest performing studio photography cameras to DNA sequencing systems.

As part of the sale, Platinum will be taking on a 263,000 square foot facility in the Eastman Business Park in Rochester, N.Y. that houses manufacturing and research facilities.

For all we know this could be a hand-out.  Certainly it is not, but again… How can anyone trust what Eastman Kodak says as gospel any longer?   Without disclosing the terms, this is a very fair question to ask of a company that has recently been rumored to be on the verge of implosion via a “reorganization.”

JON C. OGG

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