Should Amazon acquire Borders? Hedge fund manager William Ackman of Pershing Square Capital Management
certainly thinks so, comparing the concept of Amazon-owned retailer stores to Apple's successful move into bricks-and-mortar retailing. Of course it should be noted that Pershing Square owns about 30% of Borders.
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"Amazon could buy the company for about $400 million to get those locations that would take more than $1 billion to build," he told reporters on the sidelines of a conference in New York. "You have to think of it like how Apple has retail stores across the country."
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But Motley Fool's Rick Aristotle Munarriz
strongly disagrees, arguing that Amazon should continue to focus on what it does best: online retailing.
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Amazon has done little to indicate an interest in bricks-and-mortar retailing. If anything, its most recent media retailing moves seem to indicate a shift away from physical goods altogether. Its Amazon Kindle is all about delivering books, magazines, and newspapers directly and electronically to consumers. The company has digital-delivery initiatives to replace CDs and DVDs, too. Borders has a working relationship with Sony (NYSE: SNE) to promote Kindle's rival, the Sony Reader, but Amazon is smarter than to make a senseless purchase for the sake of snuffing out its only realistic e-book threat.
What would Amazon do with Borders? The online model is all about scalability, and the offline model is about getting shoppers back into the store. If Amazon's aim is true in the online space, real-world booksellers, including Borders, Barnes & Noble, and Books-A-Million (Nasdaq: BAMM), will matter less with every passing year. If Amazon wants to hedge its bets, it's better off not listening to this particular hedge-fund manager.
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So... Amazon and Borders... a match made in heaven or a recipe for disaster? And come to think about it, what would a potential match do to Sony's current relations with Borders? The death knell for the Sony Reader?