Quote:
Originally Posted by jocampo
And you are right. Amazon stock shows everything there but that's what Amazon is, an online retailer. When comparing stock and company performance, there is no way to separate that.
B&N, on the other hand, is not a retailer. In fact, because B&N is smaller and basically just a bookstore, any benefit of ereader and ebook sales, if one, should be rapidly shown on a 1 year chart, at least that's my opinion.
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I think Leonard Riggio, leading shareholder and CEO of B&N, would be surprised to learn his company is not a retailer ... or even an online retailer.
B&N has annual sales of around $7 billion, and 12% of that -- close to $1 billion -- is "digital sales" which includes Nook hardware and online sales of all goods. Yes, far smaller than Amazon ... but certainly a player.
B&N's challenge is simply that it is not profitable. It cut out its dividend at the end of last year because it would have had to borrow money to pay it. In the most recent quarter, the sales in the digital division were swamped by expenses in the digital division by a margin of 2 to 1 (if memory serves).
Liberty Media gave Riggio $200 million last month for new shares -- instead of buying the company outright for $1 billion -- and that funding will hopefully be put to good use expanding the digital portion of the company. That's all well and good: but B&N management has revealed to plans or strategy to gradually unwind the retail storefronts which they have proven are unprofitable. And if the 1300+ stores (consumer and college) aren't profitable now, when paper-based book sales are declining, hands up anyone who thinks they will be strongly profitable three years from now?