

Barnes & Noble puts itself up for sale - grellas
http://www.marketwatch.com/story/barnes-noble-to-evaluate-strategic-alternatives-2010-08-03

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jakarta
To me, it is pretty fascinating to see how Barnes & Noble has fared versus
Borders (now only 1/10 of BN's market cap).

Borders made a number of miscalculations that have really cost them dearly.
They passed up on running their own online store -- outsourcing it to Amazon,
but worse they bet big on selling media merchandise at their stores (DVDs,
CDs, Games). I am sure originally the media decision worked, but as CDs died
out (and DVD sales are dropping off), they were screwed.

Barnes & Noble on the other hand went with their own online store and bet
bigger on having their own publishing arm (plus a college textbooks biz).
Obviously in the longer run this has worked out but they are still facing
extinction. I imagine that bookstores will still continue to exist going
forward, but they will be far fewer in numbers akin to record stores. My guess
is that Ron Burkle was going to make a play for the whole company so Riggio
had to quickly react with his own potential offer (note the language he used
in the press release).

Some people will try to play up the store real estate value aspect of these
companies but I think that is not a good angle. Borders / B&N have -huge-
stores on a sqft basis. That presents a big problem for potential businesses
looking to purchase a location. I think the stores are most appropriate for
maybe furniture stores but those are still recovering from tough times during
the crisis. I don't expect them to start investing any time soon.

~~~
muhfuhkuh
What's worse is that their stores are in more well-to-do (i.e., well, or at
least better, read) suburbs and exurbs, so you can't do a "package sale" to
any company who's doing well in this environment (Dollar Tree or Big Lots, for
example) to take up space there, as the property owner and neighboring stores
in the strip would balk at the idea of their anchor store going downmarket.
So, they'll have to pawn each property off piecemeal, which is much more
laborious.

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tzs
> Leonard Riggio, the company's founder and largest stockholder, has informed
> the Board that, in light of its decision to explore strategic alternatives,
> he intends to consider the possibility of participating in an investor group
> to acquire the company

For those curious how Riggio, born in 1941, could be a founder of a company
formed in 1873, it appears that Riggio's bookstore company bought Barnes and
Noble in 1971, and adopted its name.

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jackowayed
Wow, I figured it would take someone huge to buy them, but it turns out their
market cap is only $755M. Amazon's is $54B

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sliverstorm
I wonder if Amazon would have any use for them?

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wheels
Amazon has typically refused to acquire any company that would expose it to
nationwide (or even Californian) sales tax.

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frossie
Agreed, but to my confusion Amazon has been very aggressive in competing with
B&N. Every price drop of the Kindle in the last 9 months has seemingly been in
response to a price drop of the Nook (B&N's e-reader). Given that B&N is like
a gnat on Amazon's elephant, I haven't been able to figure out what is going
on.

So it wouldn't surprise me if Amazon somehow got involved here, perhaps in a
way that would avoid the sales tax issue.

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mkramlich
It's as if B&N suddenly realized, "We're mostly selling just bits and bytes,
but at a heavy markup and with tons of warm bodies and brick and mortar. The
Internet is going to eat our lunch. Holy shit!"

Except the rest of us realized this years ago.

That said, there are still things about a physical bookstore that the Internet
doesn't "do better/cheaper". One is the pleasure of perusing the bookshelves.
Second is the social factor of seeing other folks there and striking up
conversations. Third is the Starbucks-like factor: every B&N I've been to
seems to have a mini-coffee shop inside of it, complete with tables and snacks
and power outlets. Very smart move, because we still can't download tables or
coffee over the Internet, let alone for free.

~~~
code_duck
It's true, I can flirt in person at B&N, and Amazon.com provides no such
functionality! I go there for the experience of getting out of my house and
walking around in the presence of actual people (I work from home). The coffee
shop isn't really as inviting as Starbucks or Caribou, though, in my locality,
though it is nice enough. They just stopped charging for wifi a few months
ago.

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mkramlich
Same here, and I also often work from home or coffee shops.

I live in suburban Colorado and there are 3 places nearby I can go to almost
assuredly see good looking women on a daily basis, even weekdays, even the
middle of the day: Target, B&N and Starbucks. (Target is the most reliable,
for whatever reason.) Walmart tends to have the worst looking women, so even
if I could get groceries there a few cents cheaper per item, it's just not
worth the impact on my overall quality of life.

One advantage to B&N over Starbucks is that at Starbucks I feel obligated to
buy something as micro-rent for the table space, even if I'm not
hungry/thirty. At B&N I have the excuse of browsing for books and magazines,
so every trip can be free, guilt-free. Starbucks has awesome bathrooms though,
and lower chance of screamers, er, I mean, kids.

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protomyth
755.71M market cap - 510.40M debt - would be an interesting way to instantly
get a lot of retail locations (700+ stores and 600+ campus stores).

I guess I should expect the Apple and Microsoft sites to contemplate each
companies purchase. Probably some HP action in there too (so they can be more
like Apple).

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aspiringsensei
You seem to be assuming they own all of their retail stores. Is this true?

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jakarta
On their balance sheet, under assets, they record about $812M worth of value
for their net property, plant, and equipment. With 720 store locations that
comes out to about $1M in value per store. That's probably understated by a
lot because of the excess depreciation charge they take.

~~~
aspiringsensei
I would humbly submit that PP&E likely is dominated by warehousing facilities
and books at a place like B&N. It may include some real estate, but I wouldn't
bet on it representing the value of 720 store locations, even with aggressive
depreciation schedules.

I would bet their PP&E likely has a large emphasis on esoteric distribution
equipment, as well as some stores. I am just wildly speculating though: the
business of selling books is too crappy (low cashflow yeilds) to get me
interested enough to crack open a 10-k.

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dangrover
One of the main reasons I'd go to a brick-and-mortar store is to be able to
pick up a book that day rather than get it shipped.

Borders has nice kiosks you can use to look up where a book is, but at Barnes
and Noble you have to talk to someone at the information desk and watch over
their shoulder to make sure they're spelling the name of the book right, etc.
Inconvenient.

Also, usually at brick-and-mortar stores, if they don't have something they'll
say "but we can order it for you", which has never made sense to me. If I
wanted to order it, I'd do so more cheaply online.

Bookstores also need to focus on the browsing experience and the immediate
gratification aspect if they want to compete with Amazon.

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gwern
> Also, usually at brick-and-mortar stores, if they don't have something
> they'll say "but we can order it for you", which has never made sense to me.
> If I wanted to order it, I'd do so more cheaply online.

I did this when I was younger. The point was, I _did not have a credit card_.
By ordering in the store, I could pay cash or use gift certificates.

(Ask a parent? Buy a prepaid debit card? Oh, you funny funny people.)

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mattmaroon
The edited title is very misleading, not only because it's a publicly traded
company (and thus always for sale) but also because all they're really saying
is "yeah we know we're plummeting, but don't sell your shares."

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zandorg
In this town in the UK, all the 2nd-hand bookshops are shutting down one by
one due to Amazon's 'used book' sales. It's hard to sell a book for £3.50 when
you can buy it from Amazon for 1 penny plus £2.75 postage.

