Kodak Shares Soar: Is it Only for the Patent Value?

Shares of Eastman Kodak jumped more than 13 percent Tuesday after CEO Antonio Perez confirmed its patent auction has attracted prospective bidders.

Kodak shares closed at $3.40, up 36 cents, or 11.8 percent, boosting the Rochester, N.Y. -based photography pioneer's market capitalization to $915 million.

Intellectual property investment banks speculated the 1,100 patents alone could be worth as much as $3 billion, which suggests a company might have an easier time bidding for the company outright.

A check of U.S. Securities and Exchange Commission filings showed no extraordinary activity this month by a bidder, though.

More than 70 percent of Kodak shares are held by mutual funds and institutional investors including Kohlberg Kravis Roberts, the giant private equity firm. KKR has two directors on the board, who could potentially facilitate a direct company sale.

CEO Antonio Perez told Bloomberg News that Kodak, through its investment bank, Lazard, now has several signed non-disclosure agreements. He declined to be specific.

Because the intellectual property is geared so heavily to imaging, analysts have suggested smartphone makers like Apple, Google and Samsung Electronics might be bidders as well as other technology players such as Microsoft; Adobe; Amazon, the Kindle developer keen on getting into smartphones, or a foreign bidder.

An intellectual property banker who had been involved in the recent auction of Nortel Networks patents, which went to an Apple-led syndicate for $4.5 billion, said a client was looking at the Kodak IP. But in an e-mail, he declined to identify it or provide further details.

Perez, a former head of Hewlett-Packard's money-spinning printers division, said Kodak realized the value of its IP might be higher than believed after he saw the Nortel Networks auction.

From 1993 to 2000, Kodak had been managed by George Fisher, a former head of Motorola, who was recruited to help shove the 131-year-old company into the digital age. Earlier this month, Google agreed to acquire Motorola Mobility, Motorola's consumer business, for $12.5 billion, in part for its IP.

Kodak is advertising patents for technologies it's not using. While the company has sold many businesses over the years, from chemicals to medical imaging, it remains active selling cameras, printers, film, photofinishing and other services, competing with HP in online photography and printers.

In cameras, though, Kodak is well behind Japanese competitors such as Nikon and Canon in market share as well as profitability.