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FWIW, I'd say B&N will only barely survive this transitional period.
I will say they're not as bad off as Borders was, though. The proxy fights were bad, but not as bad as a revolving door spinning with incompetent managers collecting 7-figure payouts. B&N has a lot less debt and largely survived its expansionary phase. The dividend cut was obvious well over a year ago, and is better for the company's bottom line.
However, like it or not the physical stores will be a huge albatross around B&N's necks for years to come. Any bump from the Borders closings is proceeded by pain inflicted by massive sales, as the closing Borders desperately tries to unload stock.
And no, B&N is highly unlikely to expand its digital business internationally. If they can't turn a profit on domestic sales, going abroad is only going to make things worse.
The chain stores don't have all that much to recommend them. They aren't distinctive or specialized like an indie stores can be; they can't compete with the big box stores on prices for best sellers; they can only carry a fraction of what's available online.
They may well survive with the Nook, college stores, online and a smaller number of marquee stores in high-profile locations. But if they do, they'll wind up a shadow of its past life as the 800 pound gorilla of the book biz.
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