One of the great American companies, Eastman Kodak (EK) is barely hanging on, warning that it may not last another year.

The company said last week it may have to take on more debt or sell a large chunk of its patents in order to survive the next 12 months. Kodak also cut its cash outlook and said operational losses have mounted to $400 million to $600 million for this year. Previously, the company estimated losses at $200 million to $400 million.

What happened to Kodak, once a global powerhouse?

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The easy answer is that the traditional film industry it once dominated collapsed as digital cameras took center stage. But Kodak's decline was also due to bad decisions and a stubborn inability to adapt.

Kodak's early days
Kodak was born when George Eastman, a high school dropout who worked to help his struggling family, became absorbed in photography in the late 19th century. He experimented with gelatin emulsions for three years, inventing a formula for dry-plate photography and a machine that could prepare large numbers of plates, the company said.

Eastman set out to make photography easy for the everyday user. He devised new coatings for photography paper. He came up with ways to roll paper film in a holder. He coined the name Kodak and trademarked it in 1888.

The innovations continued. The debut of Kodachrome film in 1935 changed the industry. By 1988, the company employed nearly 150,000. Kodak became an industrial giant, and its stock for decades was a reliable winner.

Share price decline
Kodak shares went from $20 in the late 1970s to a peak of around $90 in the mid-1990s. With a high and steady dividend yield, it was known as a safe buy. But the stock began a prolonged decline in the 1990s from which it would never recover.

Kodak was booted from the Dow Jones Industrial Average ($INDU) in 2004
These days, Kodak trades at about $1.17 a share on its way to penny-stock territory. It hit an all-time low of 54 cents a share in September.

Can Kodak ever get its share price back into decent territory? It doesn't look that way.

Missing the boat
The great irony with Kodak is that it was on board with digital camera technology before just about anyone else. One of the company's engineers, Steve Sasson, is credited with having invented one of the first digital cameras in the 1970s. Sasson's 8-pound camera had a resolution of .01 megapixels.

But Kodak was reluctant to push digital technology, worried it would eat into the traditional film business that was its cash machine. The company wouldn't begin selling mass-market digital cameras until 2001, the The Associated Press reports.

Kodak was too slow to react, and that pattern would hurt the company time and time again.

At least Kodak was smart enough to do one thing: build up more than 1,000 digital-imaging patents.

Embracing technology
Kodak plunged into digital with a vengeance at the turn of the century, and by 2005 it had topped the U.S. market for digital camera sales. But there was a problem: Digital cameras didn't have the profit margins that film did.

And so Kodak embarked on a technology crusade, offering everything from the super-fast scanning service called Scan the World to online photo-sharing tools like EasyShare. The company's chief executive, Antonio Perez, was optimistic: "In two to three years, this will be seen as one of the most successful transformations in the history of our country," he told BusinessWeek in 2006.

But Kodak again missed the boat. The prices of digital cameras would continue to drop to the point where profit was almost nonexistent. And the digital-photo services Kodak invested in were lost in a crowded field of innovation.

"They lost their magic touch," a Morningstar analyst said about the company in 2007. "There are way too may people producing similar technology better."

Exploring new business
So Kodak began branching farther out in search of new business. It began making camera chips for use in cellphones. It developed a medical-imaging branch.

But again, the competition proved to be too intense. The medical-imaging arm couldn't compete with General Electric (GE) and Philips, and Kodak sold that business in 2007.

Kodak jumped into ink-jet printers and tried to flout the razor-and-blades model used by competitors. Instead of selling ultra-cheap printers and scoring the profits on ink, Kodak tried to sell pricier machines and cheaper ink cartridges.

Desperate times
So what's left now? Camera momentum is now moving into smartphones, and Kodak has been left behind.

The company now sees its future in the printer business, both in home photo printers and commercial high-speed presses. But Kodak is pouring money into the business in hopes of making it successful. Its digital-imaging unit lost $90 million in the third quarter.

Kodak needs more cash to grow this business and continue operating, and luckily it still has all those digital-imaging patents it pursued decades ago.

Now Kodak wants to sell those patents -- about 1,100 in all -- to the tune of about $3 billion. The question is whether the company can sell those patents at a good price, with buyers knowing full well the financial straits the company is in.

CEO Perez is confident. "I have a high degree of confidence in our ability to execute this plan," he said last week on an earnings call. And indeed, the company said it would likely end the year with $1.3 billion to $1.4 billion in cash. Certainly nothing to sneeze at, but at the rate the company is burning through money, that balance is sure to drop.

There's a lot of uncertainty at Kodak now, and that turmoil is reflected in the company's stock price. Does Kodak have a future, or is the company destined to become obsolete?

"There are many balls in the air," one analyst, Chris Whitmore of Deutsche Bank Securities, told The New York Times. "It's like Kodak is juggling while sitting on a unicycle in the dark."