Kodak to Slowly Stop Patent Lawsuits Used to Aid Capital
Date: June 28, 2010
New York, NY -- According to an article from 25 June in the Wall Street Journal, Kodak’s CEO Antonio Perez has decided to have his company spend less time with patent lawsuits going forward. This is not to say the pursuit was fruitless. Rather, it was quite the opposite and generated much needed cash flow that has enabled Kodak to move forward with their printing interests. Though, it would be remiss to call it a total success as of yet. Their printers are still a work in progress and need to grow quickly to keep pace with Kodak’s rapidly declining film business. During an interview at the company’s headquarters in Rochester, Mr. Perez remarked that “ ‘We need [cash flow from patents] right now because we're investing too much for the size of the company in these new businesses.’”
While early on after taking the reins at Kodak, Mr. Perez sought to expand Kodak’s business by producing digital cameras. This new phase of his tenure is now trying to make a gamble on consumer and commercial inkjet printers. That said, profits from this new venture will likely not be realized for two more years.
Over the past several months, Kodak has found some success with its inkjet printers. While their printers may initially cost more money, they have ink which is designed to be priced under what their major competition like HP, Canon, and Lexmark. Those claims have been disputed by HP formally and Kodak’s campaign was revised after an FTC ruling. It is not enough to dissuade people however, who have purchased enough Kodak printers in the past year to double the number of homes that have one. Mr. Perez does believe that Kodak will be able to claim over 5% of the market share in printers by the end of 2010.
One analyst with Deutsche Bank, Chris Whitmore, believes that goal might be a lofty one—at least within the timeframe of Mr. Perez—and said specifically that they
are “‘somewhat skeptical they can actually get to that level [of market share]’”. This is because as Whitmore says that the “market is so competitive and profits come from ink, which requires lots of printer sales.”
According to Mr. Perez, the patent lawsuits will subside as the commercial and consumer inkjet printer businesses become profitable. The idea of future patent dealings will be business relationships rather than demands for cash. It appears as though, at least from Kodak’s perspective, that the companies who they sued were offered the chance to broker licensing deals but non-takers instead settled for lump sum transfers of cash from their coffers into Kodak’s.
We will see going forward what successes Kodak is able to have considering the market. Rest assured, it will not be a climb free of obstacles.
