Google & Apple Together; Picture That With a Kodak
Jason is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
According to a report by Serena Saitto, Beth Jinks, and Brian Womack of Bloomberg.com, Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL) have decided to join forces to purchase the photography patents of Kodak for a sum of more than $500 million. Seeing how these two duke it out on the market, this team-up may seem hard for you to picture, but it should be taken into consideration if you are interested in investing in either part of this dynamic duo.
But wait, what happened to Kodak?
Kodak, once THE name in photography, lost its edge, and its market niche, when eager tech companies placed digital cameras into consumer’s hands. Jordan Crook of techcrunch.com reports that
“A big part of the issue [Kodak’s failure] there was talent. The same employees that may be geniuses in film and film cameras aren’t necessarily as advanced in electronics. This, of course, did nothing for company solidarity as Kodak’s digital and film branches were at odds. Kodak had plenty of great people and great photographers, but they couldn’t keep them on the payroll as other major players dropped into the digital game after 2000.”
This, coupled with the advent of the camera phone, spelled disaster for the 130+ year old company, who ultimately filed for Chapter 11 bankruptcy after having invented the first digital camera in 1975.
Enter the opportunity seekers; what Google is looking to prevent & what Apple knows
There was a time not long ago when Apple and some other well known mobile giants joined forces to purchase 6,000 patents of another wounded telecommunications company for $4.5 billion, leaving Google out of the party. If this were to happen again Google would be left to either negotiate handsome licensing fees with Apple, or be hit with bunches of lawsuits on infringement of patent rights. Apple, on the other hand, knows that it must keep a clear advantage in as many patent battles as it can to avoid the costly ambiguity of rival devices.
How it could affect your portfolio
With these super tech companies joining forces on Kodak’s playbook of patents, the hope is that we do not see a decrease in patent battles with existing or upcoming photo-based gadgets from the two (something that eerily has already started to occur). I don’t think this will be a good thing if you’re looking to land both of these into your portfolio. Much of Apple and Google’s upward mobility comes from their fierce innovative competition, which breeds great products, volatility, and profits.
Kodak investors (fans) are not without hope
At the great price Kodak shares are going for right now (less than a cup of coffee), you’d have to be a very big fan to want to invest. But if this is the case, there’s hope for you: Serena Saitto, Beth Jinks, and Brian Womack of Bloomberg.com have also reported that Kodak has not given up the battle for profitability.
According to their report:
“The patents for sale relate to the capture, manipulation and sharing of digital images. Kodak is selling them to fund a turnaround after seeking Chapter 11 protection in January. At the same time, it’s pursuing a plan to shrink the company and focus less on photography and more on commercial, packaging and functional printing and enterprise services.”
Could this mean that Kodak is a buy? It all depends on how you picture it.
MindOverMarket has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!