I agree, it did not seem profit sharing is going to happen. However I do believe that delevering the company will be very beneficial to Kodaks shareholders.
If we are able to pay off debt completely that would result in approximately $1.5 per share in annual savings.
Considering management is saying we will be cashflow positive this year and that management is saying prosper will not be profitable this year....that will mean an additional $1.5 per share, per year forever!!
Prosper sale is not included in their estimates.
Again, not saying we will recieve 600 million for this division... however crazier things are happening in this market everyday. With negative interest rates in europe and japan.... and with large chinese companies trying to take their money out of china (by purchasing US companies).
I dont know where it is we are disagreeing. Kodak is an ink manufacturer. I agree that nobody buys "name brand" ink for their cheap consumer printers that cost 100-500 bucks... because who cares if the warrantee is voided.
However when it comes to $500,000-2,000,000 B2B printers, I would personally not risk voiding the warrantee using "non-kodak" ink.
On the call kodak says that a larger companies would be more successful selling the technology and can absorb the losses of selling the large printers easier.
Also on the call they say that there are large companies interested in the technology. That means more than 1 company. Again dont take my word, look up the transcript of the call that is available on seeking alpha.
Funai paid 100 million for the technology, without a license to use lexmarks name. Also the purchase was for the consumer printers and not so much the industrial ones.
Also I would argue that Kodak's prosper tech (B2B 2-3 million dollar machines) is not on the sale level of the consumer printers that were sold. If you want to use the lexmark sale as a baseline for the possibility of what kodak might get, the number might be north of 200 million.
That is money that kodak can use to pay down debt and that will result in immediate bottom line boost. I welcome the sale at any price, weather 100 million or 300 million.
The CEO said that kodk will use the cash from the call to pay down debt. Now lets see what type of number is going to be put on the table.
Keep in mind that kodk pays 63 million a year in interest, which is about a 10% interest rate. Therefore even if they sell this division for only 100 million there will be a 10 million dollar per year difference on the bottom line.
Now on there call Jeff said they have been "in talks with prospective buyers" which implied more than one buyer. Who knows maybe we get more than 200 million by a chinese company trying to get their money out of China.
Keep in mind that earnings estimates do not include any savings that will happen by paying down debt. So if we save 10-30 million a year on interest expense and are not losing money putting up 2-3 million dollar printers, we might add another 20-50 million to the bottom line.
Downgrades to follow by the end of day and into tomorrow you are going to see some downgrades. Just keep in mind a company like LNKD crushed earnings but offered lower guidance and got crushed 45% in the day. I dont think that is the case today, but I do think we will see under 30 by tomm close.