Kodak Licenses Projection Patents to Imax

Discussion in 'Industry News' started by lonelyboy, Oct 16, 2011.

  1. lonelyboy

    lonelyboy Member

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    http://www.bloomberg.com/news/2011-...patents-to-imax-as-solvency-issues-mount.html


    Kodak Licenses Projection Patents to Imax

    By Dan Hart - Oct 17, 2011 5:52 AM GMT+0800 .Tweet inShare.2
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    Eastman Kodak Co. (EK) agreed to provide laser-projection technology to Imax Corp. (IMAX), bolstering revenue as the unprofitable 131-year-old camera company seeks to stave off bankruptcy.

    Kodak, based in Rochester, New York, will receive an upfront payment of more than $10 million, a milestone payment and ongoing royalties, said a person with knowledge of the matter. Imax gains technology allowing it to expand the use of digital projection on its giant-screen theaters, the Mississauga, Ontario-based company said today in a statement.

    The 10-year deal helps Kodak narrow a cash shortfall and advances a goal of generating $250 million to $350 million in revenue this year from licensing intellectual property. The company said on Sept. 30 that it has “no intention” of filing for bankruptcy.

    “This is the ordinary course of business and I think, if anything, it demonstrates that they have intellectual property other than the image capture and printing side,” said Mark Kaufman, an analyst at Rafferty Capital Markets in New York.

    The cash will be used for general corporate purposes, said Gerard Meuchner, a spokesman for Eastman Kodak. He declined to disclose terms.

    Bright Image
    Kodak put a separate set of digital-imaging patents valued at an estimated $3 billion up for sale in July. The company is facing pressure from its bondholders to use cash from asset sales to pay down debt, people familiar with the situation said last week. Some bondholders have met with bankruptcy lawyers and restructuring advisers to help ensure they are paid, the people said.

    The Kodak technology will enhance the brightness of digital projection, Imax Chief Executive Officer Rich Gelfond said. This will enable Imax to display pictures using digital images on its screens larger than 80 feet (24 meters) instead of being dependent on 70mm film, as well as in dome theaters, Imax said. The technology is expected to debut by the second half of 2013, the company said.

    “The Eastman Kodak technology helps present a really bright image,” Gelfond said in a telephone interview. “The cost comes down and enables this to happen.”

    Kodak engineers will work with Imax employees during the next 18 months to bring the technology to Imax theaters, the company said. Kodak’s technology is expected to illuminate screens as large as 100 feet and dome theaters with a brightness and clarity not currently available, Imax said.

    Kodak’s operations used $847 million in cash during the first half of this year, company filings show. At the end of the second quarter, Kodak had $957 million in cash and near-cash items.

    Eastman Kodak shares fell 4 cents on Oct. 14 to $1.24. The stock has declined 77 percent this year. Imax slid 2 cents to $17.38, and the shares have fallen 38 percent this year.
     
  2. tomalophicon

    tomalophicon Member

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    ...the people said.


    So Kodak are selling Imax an idea, so that Imax will no longer buy Kodak film?
     
  3. lonelyboy

    lonelyboy Member

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    I think even though Kodak is not selling the patent to IMAX, IMAX will eventually use less and less Kodak film, it it because they are installing all IMAX digital projector to new IMAX screen.
     
  4. tomalophicon

    tomalophicon Member

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    Sorry, I meant lease.
    Got ya. Sad state of affair in my opinion. But that's progress.
     
  5. lxdude

    lxdude Member

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    I think that's it. And if they don't start making money off it, someone else will come along and make something similar.
     
  6. Steve Smith

    Steve Smith Subscriber

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    If Kodak's patents are worth so much, why isn't Kodak using them to make profitable product rather than selling or licencing them?

    Kodak has the advantage that it doesn't need to pay for these patented ideas.


    Steve.
     
  7. Rudeofus

    Rudeofus Subscriber

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    I have seen quite a few companies go under in the last 20 years, and the clearest sign of terminal tail spin is a big press release for marginal success stories. A company burning almost 1 billion touting a sale of 10 million would certainly fall into this category. Especially if this sale cuts into some other market for that company :sad:
     
  8. railwayman3

    railwayman3 Member

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    Sadly, that's very true....

    "The cash will be used for general corporate purposes, said Gerard Meuchner, a spokesman for Eastman Kodak".....basically the sale of a capital asset to meet revenue deficits. Not a good long term answer...it's a bit like selling the family silver to pay this week's food bill. :sad:
     
  9. Helinophoto

    Helinophoto Member

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    Maybe they need money, fast...?
    Creating a whole product line demands R&D, production facilities, materials etc etc....that's a long-term investment.

    The thing I am wondering about is where is Kodak really heading? Are they planning to scale down everything and end up as something completely different than today?
     
  10. Tom Kershaw

    Tom Kershaw Subscriber

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    IMAX Digital is in no way similar to the traditional 15 perf 70mm film version. The resolution is apparently only slightly better than standard 2K digital cinema, and the screen size is dramatically smaller.

    Tom
     
  11. lonelyboy

    lonelyboy Member

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    The laser projection technology is developed by Kodak within 2 years. When Kodak announced the technology 2 years ago, it is intended to be licensed to other manufacturer and Kodak had announced clearly that it will not manufacture any digital projector using this technology.
     
  12. lonelyboy

    lonelyboy Member

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    Kodak planned to announce this news on Oct 17 but however, it was leaked to media on Oct 16, I guess it may be by IMAX.
     
  13. lonelyboy

    lonelyboy Member

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  14. Christopher Walrath

    Christopher Walrath Member

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    One thing's for sure. They will end up something different than today.
     
  15. billbretz

    billbretz Member

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    It's a typical, normal press release. Just like all the ones here:

    http://www.kodak.com/ek/US/en/News_Media/News_Releases.htm

    Not a sign of trouble. Not that they aren't in trouble, but this isn't an indicator.
     
  16. billbretz

    billbretz Member

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    It's not at all like that. It's licensing technology over ten years.

    They are making some money from an asset. Not enough for financial stability on this one deal, but it's still $10M. Complain about EK's past business decisions, sure, but this is not something to have an issue with today.
     
  17. lxdude

    lxdude Member

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    From what I gathered, large projection size is a main benefit of the Kodak technology.
     
  18. railwayman3

    railwayman3 Member

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    You deleted the main part of my posting from your quotation. I included this: "The cash will be used for general corporate purposes, said Gerard Meuchner, a spokesman for Eastman Kodak". (Not clear if that includes the 10 years of licensing income?) To me, this doesn't say that profits will be enhanced, new products developed, stockholders or employees benefitted or the financial problems solved, and it could be that it just all disappears into a huge hole. My views don't matter a toss to anyone, of course, but if the banks, creditors and bond-holders think the same, it will matter.

    I don't have any issue with this business decision, or, indeed, any better suggestions. It was a normal press release of a standard business transaction, not a miracle. I was just speculating, once the family silver is sold to pay this week's food bill, where does the money come from to pay next week's bill? OK, if licensed out for 10 years, this particular asset is still there...but it can't be licensed a second time during that 10 years, and, at the end of that time, it will likely be obsolete unless there is continued (expensive) R&D.
     
    Last edited by a moderator: Oct 17, 2011