Breakingviews - ICO represents last-gasp hope for struggling Kodak

A Kodak sign for film and cameras is pictured on the now closed Morgan Camera Shop along Sunset Boulevard in Hollywood, California January 12, 2012. REUTERS/Fred Prouser

NEW YORK (Reuters Breakingviews) - What do you get when you cross the feverish world of crypto-currencies and a faded industrial icon desperate for a new lease on life? The answer, provided Tuesday by Eastman Kodak, is KodakCoin.

The iconic company filed for bankruptcy protection in 2012 after fumbling the shift to digital images. Now it’s betting its future on digital currencies with an initial coin offering designed to help photographers sell their work. The crypto buzz more than doubled its stock, but it’s unlikely to do anything like the same to the company’s sales or profit.

The Rochester, New York-based company emerged from bankruptcy in 2013 relieved of much of its debts and patents. It refocused around digital printing, packaging and a legacy film business that’s a shadow of the glory days when Paul Simon had a hit song rhapsodizing about Kodachrome. None of those has caught on. Sales fell by a third in the first three years after bankruptcy. They dropped another 8 percent in the first three quarters of 2017, to $1.1 billion, and the bottom line dipped into the red. The company’s market cap, nearly $30 billion at its peak in the late 1990s, fell to just $135 million early this week.

The announcement of the planned blockchain platform and initial coin offering changed the stock’s trajectory on the day. Kodak is just the latest to see the potential halo effect of crypto-currencies after bitcoin soared some 14-fold in 2017. In December, stock in tiny Long Island Iced Tea tripled after it renamed itself Long Blockchain.

Startups raised more than $3 billion with ICOs last year, led by Filecoin, a blockchain data-storage network that raked in $257 million. Yet the field is growing crowded. ICO Alert lists roughly 80 offerings currently in the market and a similar number planning to launch in the next two months.

Kodak Chief Executive Jeffrey Clarke will take whatever he can get. The company has been looking for assets to sell to pay down some of its $845 million in debt, according to Eikon data. A blockchain platform could give photographers a better way to license their images and receive payment. But it’s hard to see how that will reverse Kodak’s decades-long decline.


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