Picking through Eastman Kodak's (EKDKQ.PK) remains as the photofinishing pioneer wiggles its way through Chapter 11 bankruptcy protection is paying off for Shutterfly (SFLY).
The company behind the namesake website where users can turn digital snapshots into photo books, mugs, and greeting cards is the top bidder for Kodak's photo-sharing service. To be fair, Shutterfly is also the only bidder for Kodak Gallery.
Shutterfly bid $23.8 million for the shutterbug-friendly site that was originally called Ofoto before Kodak acquired it as the dot-com bubble was bursting in 2001. Kodak used the site as a way to push its photofinishing services, but it underestimated the appeal of simply sharing pictures digitally.
Who prints pictures these days when we can always revisit digital photographs on the cloud?
Shutterfly's offer was accepted by the court as a stalking horse bid last month. Other interested bidders had until the end of last week to top Shutterfly's offer. It was low enough that it should have smoked out a few potential buyers, but there was never another company that thought it could make something out of a photo-sharing site that had been largely left for dead.
It wasn't always that way.
Kodak Gallery's revenue peaked at $150 million in its heyday, but it was never profitable, sources told The Wall Street Journal.
Between Kodak Gallery's outdated model, and folks fearing the worst as Kodak's finances unraveled, the site was becoming a ghost town. Just 971,000 unique visitors checked out Kodak Gallery last month, according to traffic tracker comScore, a 29% plunge during the course of a year.
Making Lemonade Out of Pictures of Lemons
If the court ultimately approves the sale -- and there's no reason why it shouldn't, given the total lack of rival bidders -- Shutterfly will know what to do. Shutterfly's traffic and revenue have grown nicely over the years, and the site is very profitable.
Kodak Gallery's dwindling user base may not be very active, but if Shutterfly is able to preserve the prints and reach out to the service's cumulative 75 million registered users, it may attract more than enough new business to make the affordable $23.8 million bid worthwhile.
Nice job of photo-bombing, Shutterfly. Enjoy your prize.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article.