Kodak declared this week that it was getting into the cryptocurrency and blockchain business. The announcement was thin on details and big on splash, suggesting that the investor relations staff was far ahead of the corporate strategy team. The move is a daring one for the Rochester, New York-based company. Its total miss of the digital-photography revolution was probably one of the great corporate blunders of all time. Apparently, its current management is dead set on reversing that legacy.
Investors gorged themselves on the move. Kodak stock closed at $10.70 after the announcement, representing a more than 300% gain over its previous value. The frenzy suggests that some investors have gone off the rails. Implementation of a blockchain-based photographer rights platform is unproven; the company is merely licensing its name to another firm to develop it. And the use of soon-to-be minted KodakCoin to pay for those usage rights seems to be a stretch, when traditional payment mechanisms or broadly-accepted cryptocurrencies would suffice.
The parody-like development appears to be an act of desperation for the faltered company. Jeff Clarke, Kodak’s chief executive officer, was a c-suite executive with Compaq at the peak of the dot-com bubble in 2000. His high-risk fintech strategy is informed by those dizzying years in which investors shoveled money at internet-related firms. What he may not recall is that those companies that survived the dot-com crash were largely those that eschewed hype and micro-managed their profit margins. ■
Our Vantage Point: Issuers and investors seem to be drinking the same potion, as they maneuver to exploit the crypto-craze. A likely meltdown in the market will set back fintech innovation by many years.
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Image: Fast-evolving cryptocurrencies are a controversial asset class. Credit: Violka08 at Can Stock Photo Inc.