Disclosure: The author holds no position in any stock mentioned.

Sears Sells Inventory And Customer Lists From Kmart’s Pharmacies To Be Closed To Walgreens is a post from Inelegant Investor - Something of Value. All Rights Reserved.

some of the small cities and towns where Sears has announced closings that are desperate to keep their stores.

Now, at least four of the places affected — Jackson, Miss., Cleveland, Tenn., New Smyrna Beach, Fla., and Harper Woods, Mich. — are fighting the company’s decision. Local governments, afraid of the economic impact of the closures, are appealing to Sears Holdings with petitions, rallies and even tax incentives, so far to no avail.

“We would like for a major store to remain in the Jackson area,” pleaded Mary Garner on the online petition started by Jackson Mayor Harvey Johnson Jr. “Please do not desert us.” The petition had 3,251 signatures as of Wednesday afternoon.

We’d be surprised if the company changes its decision. The stores being closed have long histories of being unprofitable, and it’s unlikely that community response can be strong enough or sustained enough to reverse that, particularly given the level of investment Sears would have to put into the stores. The company said as much in an email to the Huffington Post

“We appreciate the community support and in fact have seen an increase in traffic to these stores since the petitions have started,” Tom Aiello, a Sears spokesperson, wrote in an email. “Unfortunately these stores have lost money for several years and Sears Holdings, as a company, cannot continue to support underperforming stores.”

There was a time when having a Sears put a town on the map.  That time is long past, and the sooner these cities and towns move their focus from the past to things that can drive their future prosperity, the faster they will be able to make meaningful progress with their economic development.

Disclosure: The author holds no position in any stock mentioned

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When Sears Is All You Have- Small Towns Plead In Vain For Sears To Stay is a post from Inelegant Investor - Something of Value. All Rights Reserved.

The headline’s implication is that as a result of the iPad 3, Amazon(AMZN) reduced a previously scheduled Kindle Fire order by 50%. Let’s see the content of BusinessInsider’s actual post:

Amazon sliced its Kindle Fire orders in half for the Q1 2012 to 3 million units, according to DigiTimes, citing supply chain sources.

The cut is likely due in part to the end of the holiday shopping season and the upcoming iPad 3, which is expected to launch in February or March.

DigiTimes reports that Amazon ordered 6 million Kindle Fires in Q4 2011.

However, the sources stated that the decline in orders for Kindle Fire tablet PCs is in line with market expectations during the off-peak season and the impact on Kindle Fire’s touch panel suppliers, including TPK Holdings and Wintek, would not be significant.

CORRECTION: Initially we said the Kindle Fire cuts were because of the impending iPad3 launch in February or March. That is not what the DigiTimes reports says. It’s likely Amazon was planning these cuts all along. We apologize for the error.

Related articles

• Amazon sells the Kindle Fire at a loss because it makes so much money on media (venturebeat.com)
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• Amazon Kindle Fire Burns Up iPad Sales Over Holidays (mobilemarketingwatch.com)
• Kindle Fire sales were on fire last quarter, analyst says (news.cnet.com)
• Kindle Fire may have cost Apple $1 billion or more in holiday iPad sales (bgr.com)
• iPad sales slip as Kindle Fire sales surge (venturebeat.com)
• Kindle Fire Unseats iPad as No. 1 Tablet at Best Buy (mashable.com)

BusinessInsider To Amazon: Drop Dead! Hurls Ungrounded Speculation As Fact is a post from Inelegant Investor - Something of Value. All Rights Reserved.

official late last night and filed a voluntary Chapter 11 business reorganization.  Citigroup will provide $950 million in debtor-in-possession financing. As we had stated, the company’s liabilities were to great, its ability to monetize intellectual and real property too slow, and its digital and other new operations not developing quickly enough to avoid this outcome.

We continue to believe that Kodak will emerge from the bankruptcy as a strong, but smaller company, having shed the liabilities that strangled it, having disposed of non-core assets, and having retained those parts of the company with the best prospects. It is important to note that current shareholders will not participate in this and that their shares are worth zero.  Inevitably in a bankruptcy, a robust market continues in the company’s shares despite the fact that there are very few cases when shares of bankrupt companies retain value(one recent example would be SYMS(SYMSQ)). This will not be an exception to the rule. Those who own Kodak ought to sell and salvage what they can, those who don’t should not buy. Our sympathy is with Kodak employees, vendors and partners during this difficult time.  We hope that the company’s reorganization and eventual emergence in 2013 will remove the clouds of uncertainty and create new growth and new opportunities.

Disclosure: The author owns shares in SYMSQ

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• The moment of truth: Kodak files for bankruptcy (venturebeat.com)

Kodak Shares Worthless As Firm Finally Files Chapter 11 is a post from Inelegant Investor - Something of Value. All Rights Reserved.

a rights plan which was voted down by shareholders at the annual meeting in December.  Free to acquire more Cracker Barrel stock, it was reported last week that Biglari had upped his stake to 11.8%. Now, a new 13D/A has been filed showing he has continued to buy this week, reaching 13.3% of the company, even as the price went up.  It’s not clear how much more Biglari will acquire, but one thing is clear- he’s not done fighting.  Biglari’s track record in unlocking value at Steak N Shake Fremont Michigan Insuracorp, and Penn Miller is impressive.  He is underwater on his CCA Industries(CAW) stake, but was successful in gaining a Board seat. Hopefully, Biglari’s persistence with Cracker Barrel will pay off for his shareholders.

Disclosure: The author owns shares in BH and CAW

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Biglari Takes Another Crack At Cracker Barrel is a post from Inelegant Investor - Something of Value. All Rights Reserved.

Lampert is not willing to part with shares of Sears. The WSJ reports, based on public filings, that Lampert purchased 4.46 million shares of Sears from the fund, and spent another $12 million purchasing shares on the open market.  In our opinion this is a positive sign.  That Lampert did not inject cash into the company by purchasing new shares, or by purchasing new securities senior to common equity, or by purchasing outstanding distressed debt, sends a strong message that he does not believe the company is at risk of bankruptcy or that it faces a liquidity crunch.

UPDATE: Redemptions were paid in AutoZone(AZO) shares, not AutoNation which ESL also owns a large stake in.
Disclosure: The author owns shares of SHLD

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Eddie Lampert Doesn’t Fear Sears Bankruptcy, Personally Purchases $150 Million Worth Of Sears Stock is a post from Inelegant Investor - Something of Value. All Rights Reserved.

Under the new structure, Kodak has reduced its number of segments from three to two – the Commercial Segment and the Consumer Segment – which will both report into a newly created Chief Operating Office. The Chief Operating Office will be led by Philip Faraci, who will continue to serve as Kodak’s President and Chief Operating Officer and by Laura Quatela, who was recently named, alongside Faraci, as President and Chief Operating Officer of Kodak. Faraci will focus on the Commercial Segment and the company’s sales and regional operations, and Quatela will focus on the Consumer Segment and certain corporate functions. Both individuals will report to Antonio M. Perez, Chairman and Chief Executive Officer, as will the positions of Chief Financial Officer, Chief Technical Officer, Chief Marketing Officer and General Counsel.

“As we complete Kodak’s transformation to a digital company, our future markets will be very different from our past, and we need to organize ourselves in keeping with that evolution,” Perez said. “This new structure simplifies the organization, focuses it more precisely on our consumer and commercial customers, and puts the right people in place to capitalize fully on the tremendous technological capabilities of Kodak. These business structure changes also allow us to allocate resources more productively, continue to significantly reduce administrative costs, and improve efficiency. We are confident that these changes will support our efforts to make the most of our opportunities.”

This led to a significant jump in the stock price, but it is unclear why.  The company has rearranged furniture, but ultimately not addressed the key problem which is that the company needs cash now. While this change may lead to cost savings and/or increased profitability, it certainly won’t do so in time to help the company with its current dire situation.

After the bell on Tuesday, the company released a second announcement.  In it, the company announced that it had filed patent infringement lawsuits against Apple(AAPL) and HTC.  The claims were similar to previous claims the company has made regarding infringement by phone and tablet devices of a series of ridiculously broad patents.  Interestingly, Kodak did not file any claims against Google(GOOG) or Motorola(MMI).  Kodak has been in discussions with all of these firms for sometime and been attempting to sell its patent portfolio.  This is a desperate, last-ditch attempt to force a settlement or purchase, but it is unlikely to result in any cash quickly enough to avoid bankruptcy. Despite this, shares were up 35% on Wednesday.

Mr. Market is in a manic mood and his bid this company up significantly in the last two days, but the common stock is still worth what it was before Tuesday’s open- nothing.

Disclosure: The author holds no position in any stock mentioned

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• Eastman Kodak Preparing Bankruptcy Filing- WSJ (inelegantinvestor.com)
• Eastman Kodak Divests Insignificant Division, Muddles Management Structure, Stock Jumps 20% (inelegantinvestor.com)

Don’t Be Fooled By Eastman Kodak’s Dead Cat Bounce is a post from Inelegant Investor - Something of Value. All Rights Reserved.

vendors for their sales to Sears. CIT would not confirm reports, but Sears spokeswoman Kimberly Freely confirmed the action in an email to Reuters

“We disagree with their (CIT’s) action, in fact we’d point out that other factors are approving shipments to Sears Holdings and CIT’s payables represented less than 5 percent of inventories,” Freely said.

Freely explained that “at the end of December, Sears had about $4.2 billion of liquidity, including cash balances of about $0.9 billion” CIT’s action by itself should not threaten Sears future, but if other factors follow suit, the situation could quickly deteriorate.  Sears is in the midst of closing stores and increasing its cash position, and should be in a better situation later in the year, if it can continue to operate normally.  Ironically, Edward Lampert, who controls a majority of Sears shares, also owns 2.9% of CIT, which lost 25% of its value in 2011.

We’ve written before that Sears needs to make major changes before its too late.  The company has continued to make important moves such as its recent hire of an experienced merchandiser. Unlike Eastman Kodak(EK), the company has enough liquidity to turn things around, but time is rapidly running out.

Disclosure: The author owns shares in $SHLD

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Has The End Begun For Sears Holdings? CIT Stops Financing Sears Vendors is a post from Inelegant Investor - Something of Value. All Rights Reserved.

Someone at TheStreet.com has been spending too much time watching Disney’s Angels In The Outfield. A brief item this morning stated

Roy Disney, nephew of the late Walt Disney, would own the team as a private investment. The deal would not be affiliated with Walt Disney Co., which owned the Angels until 2003. The family has partnered with Stanley Gold, the man who runs the family’s investment firm, to lead the bid for the team. Gold, who is the chairman of Burbank, California’s Shamrock Holdings and joined Roy Disney in pushing out Disney CEO Michael Eisner in 2004, is said to be in talks with potential investors.

Mostly true- except that Roy Disney died on December 17, 2009.  Gold, his long time adviser, continues to manage Shamrock Holdings, the late Disney’s family investment vehicle.  If the bid is successful, maybe they’ll leave a seat for Roy in the Owner’s box.

Disclosure: The author owns shares in DIS

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The Ghost In The Owner’s Box is a post from Inelegant Investor - Something of Value. All Rights Reserved.

What does Oneida look like today?

A third of Oneida’s roughly 450 employees still work at the company’s headquarters, a four-story granite building that stands across the street from the original Oneida Community house and doubles as a kind of living museum. Oneida advertisements from Life magazine and the Saturday Evening Post in the 1960s, some featuring then-spokesman Bob Hope, dot the walls of the office. A row of unused Kodak Carousels sits on a shelf outside the company’s in-house darkroom, long ago abandoned for a digital photography studio. Down the hall, a small group of model-makers hammers out prototypes by hand.

How did it get here?

Oneida’s financial problems were decidedly modern, and echoed the issues faced by companies in cities like Detroit and Pittsburgh. Starting in the 1990s, the company began to feel the heat of foreign competitors, who could produce utensils for a fraction of the price of American manufacturers. The attacks of Sept. 11, 2001, further hurt business, after the metal forks and knives Oneida supplied to airlines were banned on flights.

As its sales fell, Oneida hemorrhaged money — more than $157 million between January 2003 and October 2005 — and was forced to stop making flatware and close several facilities in Oneida and the surrounding cities, where the company had employed about 2,500 people at its peak. By 2006, the situation at the company, which in better times had been well-off enough to sponsor Little League teams, the golf course and other local activities, had become so dire that filing for Chapter 11 was the only option.

“Oneida tried to hang onto its manufacturing facilities as long as it could,” said James E. Joseph, Oneida’s outgoing chief executive, who is stepping down this year as part of the Monomoy transition. “From a pure business standpoint, you could argue we hung on too long.”

A few months later, Oneida exited from bankruptcy, under the control of a group of hedge funds. Led by Monarch Alternative Capital, the firms moved swiftly — if painfully — to make the company profitable. They moved a distribution center to Savannah, Ga., to save on freight costs, closed stores and struck an agreement that allowed Robinson Home Products to distribute flatware and dinnerware under Oneida’s name. The hedge funds even debated moving Oneida’s headquarters closer to New York City to give it a better shot at attracting top talent, but eventually decided against it, according to several people involved in the discussions.

Those decisions stabilized Oneida. In five years, the firms reduced the company’s debt load to around $60 million from approximately $150 million. The company now turns a small annual profit of around $15 million before interest, taxes, depreciation and amortization, according to several people with knowledge of the company’s finances who spoke on the condition of anonymity because the numbers are private. Its North American flatware business gained 3 percentage points of market share last year, according to Mr. Joseph, and still has a valuable brand name.

If Kodak is to emerge from bankruptcy a healthy company, it, like Oneida before it, will have to dispense with sentimentality, find its new core competencies, and jettison everything else.  It’s the only way to keep the name of this iconic company alive and well for decades to come.

Disclosure: The author holds no position in any stock mentioned.

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A Model For Kodak To Emulate? is a post from Inelegant Investor - Something of Value. All Rights Reserved.