Kodak may face cash crisis if patent sales fail

Eastman Kodak has warned it must raise new funds to survive the next year.The 131-year old photography firm said it might raise the cash through patent sales or by taking on additional debt.The British Broadcasting Corporation reported that the US firm revealed that its cash balance at the end of September totalled $862m (537m) after it ran up a $222m operating loss over the preceding three months.Experts said Kodak took too long to move from its traditional film business into digital cameras.The firm announced in July that it was exploring selling or licensing around 1,100 of its digital imaging patents - around 10 per cent of its library.The company said it had no intention of filing for bankruptcy, but some experts believe its fate depends on a sale of its innovation rights."Kodaks at a point where one of two things have to happen," Shannon Cross of Cross Research, said."Either they have to raise more money or they have to complete the sale. Otherwise, theyre not going to be able to continue."However Kodaks chief executive, Antonio Perez, said investors should not read too much into the companys cash balance warning, which it had been required to file under US law."These requirement statements should not be misunderstood in any way as dampening the optimism our ability to complete the sale of our digital imaging patent portfolio, which is very high," he said.However, one former executive called for a more radical restructure."I think you are going to see Kodak getting broken up and the various parts of the company will go to where they add the most value and therefore Kodak captures the most value for creditors and stock holders," the firms former vice -president Don Strickland told the BBC.Kodak Easyshare camera Kodaks balance sheet might have been stronger had it started making digital cameras earlier Strickland left the company in 1993 after he failed to get permission to release a digital camera. He claimed the firms current problems could have been avoided.He said, "We developed the worlds first consumer digital camera and Kodak could have launched it in 1992."We could not get approval to launch or sell it because of fear of the cannibalisation of film... a huge opportunity missed."
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