Quote:
Originally Posted by Fbone
To be fair Kobo recently posted a $10 million loss and needed a $50 million capital injection.
B&N reported decreased net income despite revenue and gross profit increases.
Financial success in the ereader market is proving to be elusive for many companies.
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This claim has been posted before -- that Kobo is in financial distress. This is twisting the actual facts and, in spite of your lead in, it is not fair.
Kobo is a young company in start-up mode and its business plan will call for losses during its aggressive roll-out. In fact, the ability of a young company to attract additional capital is the sign of a very healthy start-up. Kobo is running on a shoestring and has made incredible strides. Next month marks its formal launch in the US market and worldwide in July. The fact that it is now routinely included in discussions of Nook and Sony and Kindle is a laudible achievement. And Kobo is unique in being a pure ereader / ebook play.
Contrast that to B&N and Nook: the company has been for sale since last August and no one stepped up to make an offer; B&N withdrew its for sale sign in April. Then Liberty Media stepped in this month with a friendly buy-out once it was clear there would be no competition. B&N's "elusive" success is in its debt-laden 1340 store chain business; the Nook is prospering but only because B&N is able to finance it with shareholder dividends it stopped paying and using cash flow from the bookstores. And its working: Nook, backed by B&N brand, is attracting customers and is the only reason Liberty Media has any interest in purchasing the company.
There is room for 2 or 3 or perhaps 4 ebook platforms worldwide and, at this point, Kobo certainly appears to be playing a strong, not a weak, hand as was implied.