Sahm Adrangi, head of Kerrisdale Capital, had quite a bit to say about Eastman Kodak Company’s (NYSE:KODK) image rights management platform called KodakOne. His thoughts about this 138-year old company were not at all favorable.
While Kodak’s stock doubled after they announced a blockchain and cryptocurrency licensing partnership, Sahm Adrangi asserts that nothing will be achieved by the use of blockchain as an image copyright platform.
Kerrisdale believes blockchain does not minimize the amount of resources necessary to prevent copyright infringement, nor does it lower the risk. Kodak has discussed paying photographers with KodakCoins, a cryptocurrency that would be used with KodakOne.
Sahm Adrangi argues that Kodak’s actions are a stock promotion and an attempt to take the focus off of their troubled financial position. Though blockchain is in fact a legitimate technology for some industries, Sahm Adrangi does not believe photo licensing and management is one of them.
Kerrisdale Capital called KodakCoin nonsensical as a way to pay photographers because it’s only marketed to accredited investors, which means only photographers with a net worth of $1 million or an annual income of $200k can participate in the ICO. While cryptocurrency will be used by speculators, it will not be used by many image buyers or photographers.
Kodak did not develop, nor do they own, any blockchain technology. KodakOne was developed by WENN Digital. Kodak is simply a licensor that will collect royalty payments when transactions are processed. This means that the success of KodakOne is tied to WENN Digital.
With rising debt and a negative cash flow, Adrangi believes Kodak’s management has failed its investors. After Chapter 11 bankruptcy in 2011, Kodak failed to resolve the issues that led to the Chapter 11 filing. Sahm Adrangi believes Kodak’s recent actions are an attempt to prevent a fall back into bankruptcy.
The above referenced issues, along with suspicious trading activities by Kodak shareholders, are just some of the reasons why Kerrisdale Capital has called the equity worthless.