Kodak - which triggered concerns about its' financial viability going forward when it recently drew down a $160m credit line to fund ongoing operations - ended the quarter with $862m in cash and equivalents, down nearly $100m from the end of Q2.

The top line revenue missed the expectations of most analysts, who projected about $1.65bn in sales for the three months, though to be fair, the year-over-year quarterly comparisons were impacted by $210m in patent related revenue in Q3 2010 that wasn't on the books this year.

Kodak also offered few additional details on the planned sale of approximately 1,100 U.S. digital imaging patents, which represent about 10% of the company's patent portfolio and which are not core to its future, though it did note it expects the proceeds to materially increase its cash balance.

Outside estimates put the value of those patents at as high as $3bn.  In a conference call with analysts, Chairman/CEO Antonio Perez noted, "Even though our patents are not wireless patents, they are a fundamental part of the wireless ecosystem-they're very valuable and we expect to get fair value for our shareholders from them."

Commercial printing is emerging as one of Kodak's more promising plays going forward and the company touted some Q3 success in their Consumer and Commercial Inkjet, Workflow Software & Services and Packaging Solutions divisions, which saw revenues increase 13%, fueled by 44% revenue growth in Consumer Inkjet printers and ink, and 89% revenue growth in Packaging Solutions.

"In Consumer Inkjet, ink gross profit dollars doubled in the third quarter and year-to-date," noted Perez in a statement. "Our installed base of printers is now sufficiently large that we expect to meet a key milestone in the fourth quarter - achieving positive gross profit for this business as a whole, driven by ink gross profit. Packaging Solutions sales increased 89% in the quarter and more than 130% year-to-date"

During the conference call, Perez would not disclose the number of Prosper digital print heads it had sold, but did note Kodak had "many hundreds of sales."

"Let's say 1,000 heads are out there working perfectly and there are many more to come.

"There are a lot of customers that have offset presses that are good customers for our digital plates, but they're not ready to move to full digital and they won't be for years," he continued. "But they find this hybrid system fantastic and it's fantastic for us because we sell the heads, and we sell the ink and we sell the service that is associated with it."

Perez added revenue for the digital Prosper press product line rose 40% in Q3, though he would  not get exact sales numbers. He told the analysts that a lot of the growth will come from the Asia Pacific region, adding, "Many of the institutions in Europe and the US will do hybrid first as they try to utilize the assets that they have because their volumes are soft."  

"I am disappointed with the results of our legacy commercial ink jet because we wished the new products had happened a little earlier," he continued. "But I'm very pleased with Prosper because 40% growth in a market like this is extraordinary."

Perez said the company anticipates  revenue recognition for Prosperpresses will accelerate in the fourth quarter, based on installations already in the field and continued success in the marketplace. But in a published letter to Kodak employees he warned, "In Commercial Inkjet, we continued to incur higher-than-planned start-up costs for Prospersystems in the quarter and associated delays in booking revenue, while demand declined for our legacy Versamark inkjet products, resulting in a 9% revenue decline."  

"For all of 2011, we now are forecasting a growth rate from our four digital growth businesses of approximately 25%, in markets that are generally flat, because we are stealing market share from our competitor," he continued in the employees' letter.

"That's lower than the 30%-40% growth we had predicted in late July, reflecting slower economic momentum.  However, 25% is still a substantial improvement year-over-year and points to a very promising future for these businesses.  It is for this future that we are making investments today.  I know this is hard work, but hard work is what gets the reward."

Perez concluded by reassuring the analysts, "Our 2012 cash performance from our digital business will be significantly better than this year. 2011 was the peak of our cash usage - it was there in the plan because as I've kept saying by the end of 2012 we are going to get to that point where we're a self-standing digital company. We're ready for the fourth quarter and we're ready for 2012."

Kodak shares were off nearly a tenth (9.17%) at the time of writing to $1.09.

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