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S&P raises Kodak’s rating outlook

Standard & Poor’s Ratings Services gave Eastman Kodak Co. a boost, revising its “B-” corporate rating outlook from negative to stable.

The new outlook reflects its view the company’s liquidity is adequate for near-term needs and credit measures will remain appropriate for the current rating level, the ratings agency said late Thursday.
"B-" is considered non-investment grade.
 
Standard & Poor’s cited as reasons for the revision Kodak’s ending 2009 with $2 billion in cash and that the company will receive substantial cash flows from an intellectual property arrangement in 2010.

Still, the company has concerns about Kodak’s cash flow and the evolution of its business.

"The ‘B-‘ rating reflects our concern about Kodak’s long-term earnings and cash flow prospects," Credit Analyst Tulip Lim said in a statement.

The agency’s concerns center on:

  • continued secular volume decline of Kodak’s traditional photographic products and services business,
  • unproven long-term profit potential of its consumer digital imaging businesses,
  • intermediate-term potential for a decline in its entertainment imaging businesses,
  • unpredictability of IP earnings,
  • significant discretionary cash flow deficits,
  • vulnerability to economic pressures and
  • the company’s leveraged financial profile.

Kodak stock (NYSE: EK) was trading down 2 percent Friday morning at $5.86 a share.

(c) 2009 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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