Kodak Partners with NEC Corp. - Analyst Blog

Eastman Kodak Company (EK) signed a license agreement with Tokyo based NEC Corp. in order to access each other's patent portfolio. The agreement is expected to strengthen Kodak's intellectual property portfolio.

Kodak carries out numerous expansion programs and continuously launches new products at competitive prices; which are expected to push growth despite the current difficult environment for the entire industry.

Moreover, Kodak reported improved results for the third quarter of fiscal 2010 with a loss per share (excluding one-time items) of 2 cents from a loss per share of 23 cents in the year-ago quarter. Reported loss per share was much better than the Zacks Consensus Estimate of a loss of 31 cents per share. Net loss came in at $5.0 million from a loss of $63 million in the third quarter of fiscal 2009.

Also, Kodak's strategy to maintain a decent liquidity position with the expectation of $1.8–$2.0 billion of cash and cash equivalents in fiscal 2010 boosts our expectations.

Management has reiterated its sales guidance for fiscal 2010 and expects it in the range of $7.5 billion to $7.7 billion, flat with the previous year. Kodak expects losses from continuing operations in the range of $50–$150 million, including $102 million in net charges for early extinguishment of debt in the first quarter of 2010.

Segment earnings from operations are expected in the range of $350– $450 million and EBIT is expected within $275–$375 million.

For fiscal 2010, Kodak expects net cash used in operating activities in the range of $50–$150 million and cash & cash equivalents in the range of $1.8–$2.0 billion.

However, Kodak operates in a highly competitive market and encounters aggressive price competition for all of its products and services from numerous companies globally. Kodak's direct competitors include Canon Inc. (CAJ), Sony Corp. (SNE) and FUJIFILM Holdings Corp. (FUJIY). Hence, we reiterate our Neutral recommendation. The stock currently retains its Zacks #3 Rank (short-term Hold rating).