B&N to Evaluate Strategic Alternatives-Sale of Company?

[Kali Yuga]

Originally Posted by SensualPoet

I don't have the opportunity to see B&N with my own eyes.

You'd probably see people shopping in the store. However the real story is in whether they can make a decent return on profits.

The real problem is that physical bookstores are in the same position as CD/record stores 5 years ago. Margins in retail tend to be razor-thin, and the overhead of a brick and mortar store are substantial -- rent, utilities, cleaning, upkeep, staff, delivery, taxes, local ads. Selection is also limited, by contemporary standards; a book superstore might have 100,000 titles. In contrast, an e-book store with 100k titles is a joke.

Worse yet, the stores still represent a big slice of revenue, and B&N takes a hit to revenue and gets a black eye every time it needs to close stores. And even worse, as the stores lose sales, they lose profitability and drag the company down. They're stuck with an expensive outdated infrastructure, and their business looks like it's dying with every step towards a digital distribution model. Tower Records? Bankrupt. Virgin Records? Gone. Sam Goody, the venerable mall record store chain? Dust.

And to make sure they're getting kicked while they're down, management is feuding with a big investor who wants to take over and kick them to the curb. Even if the current management was 100% on top of its game, something like this is a major distraction and detriment to operations.

We'll see what happens to B&N, but as you can tell I'm not optimistic, and I don't think their management is up to the challenge. If they survive, they'll barely resemble the behemoth that terrified the industry in the late 80s....

[davidspitzer]

Originally Posted by rogue_librarian

How much of that billion did they forward to the content creators, and how much ended up in their pocket? Subtract from that costs of infrastructure etc and you still have a profit, sure, but nothing spectacular. Means to an end, as I've said.

let me correct my statement the billion dollars was Apple as someone was saying that Apple wont buy B&N as they only sell shiny toys. I was trying to make a point that content sales are huge for Apple and if it meant an increase i could see them buying B&N

[Alisa]

Originally Posted by davidspitzer

let me correct my statement the billion dollars was Apple as someone was saying that Apple wont buy B&N as they only sell shiny toys. I was trying to make a point that content sales are huge for Apple and if it meant an increase i could see them buying B&N

But they don't need anything from B&N to sell content. They've already spent the money to create their content stores themselves so even if B&N didn't come with the albatross of all those retail locations around their necks, there's not enough on the digital side to be tempting.

[davidspitzer]

[QUOTE=Alisa;1041920]But they don't need anything from B&N to sell content. They've already spent the money to create their content stores themselves so even if B&N didn't come with the albatross of all those retail locations around their necks, there's not enough on the digital side to be tempting.[/QUOTE

You are probably right

[rogue_librarian]

Originally Posted by davidspitzer

let me correct my statement the billion dollars was Apple as someone was saying that Apple wont buy B&N as they only sell shiny toys.

That, too, would have been me. I put it slightly different but that's certainly the gist of it.

I was trying to make a point that content sales are huge for Apple and if it meant an increase i could see them buying B&N

I'm not convinced. I've read enough interviews with Jobs where he said that the iTunes store was barely breaking even. I'm sure it does turn a profit, but above all it helps them sell their, well, toys. Well, let's see how that one turns out. Interesting times.

[Logseman]

There is another player in the ebook market, who has experience with physical content sales and who has a lot of retail presence too, even owning their own brand stores. This player is struggling right now because they seem to have lost their place. B&N has a better momentum, but they lack the financial muscle that this player has.

I.E: What about Sony? Do you see them making a move to add B&N's content and selling expertise to theirs?

BTW there is another consequence of this event: it makes Amazon's statements that they're making a profit in the devices less credible.

[brecklundin]

Originally Posted by Logseman

There is another player in the ebook market, who has experience with physical content sales and who has a lot of retail presence too, even owning their own brand stores. This player is struggling right now because they seem to have lost their place. B&N has a better momentum, but they lack the financial muscle that this player has.

I.E: What about Sony? Do you see them making a move to add B&N's content and selling expertise to theirs?

Sony's biggest thing is the "not built here" corporate mindset...and if Sony was in the content business, which oddly enough they are with their entertainment division/studios...but your suggestion could make sense it's just Sony has never been a retail presence sort of company, at least Apple has the Apple Stores presence to leverage if they chose to do such a deal and keep the stores open.

hehehe...I can see it now, "...iCoffee it's what every iPad/iPhone/iTouchMyself owner simply must have to make their life complete...plus Windows does not do mochaccinos!!"

[carld]

Originally Posted by Logseman

BTW there is another consequence of this event: it makes Amazon's statements that they're making a profit in the devices less credible.

How so?

[Logseman]

Originally Posted by carld

How so?

Maybe I'm overthinking it, but if B&N starts to waver after putting their hardware in a similar price level, it would be very surprising that Amazon is making any profits from a device which uses, e.g, a new screen technology whose R&D needs to be paid off.

If B&N struggles with a price point of $149 for its device and Amazon makes a profit with $139, why did B&N come to the price war in the first place? I think B and N would have known if Amazon was making a profit or not. I'd say B&N knew that Amazon was breaking even at that point, and they made a bold step they didn't imagine Amazon could counter.

[carld]

Originally Posted by Logseman

Maybe I'm overthinking it, but if B&N starts to waver after putting their hardware in a similar price level, it would be very surprising that Amazon is making any profits from a device which uses, e.g, a new screen technology whose R&D needs to be paid off.

If B&N struggles with a price point of $149 for its device and Amazon makes a profit with $139, why did B&N come to the price war in the first place? I think B and N would have known if Amazon was making a profit or not. I'd say B&N knew that Amazon was breaking even at that point, and they made a bold step they didn't imagine Amazon could counter.

I would guess that it isn't the Nook dragging B&N down but rather the other way around. It's B&N's incredible shrinking profits from their B&M stores that's dragging the company down. For all we know the Nook may be turning a decent profit for B&N.

Connecting B&N's struggles to the Nook's price point, and extrapolating therefor that Amazon can't be making a profit on the Kindle either is just too much of a stretch for me. I could be wrong, but I don't think so.

[Alisa]

Originally Posted by Logseman

Maybe I'm overthinking it, but if B&N starts to waver after putting their hardware in a similar price level, it would be very surprising that Amazon is making any profits from a device which uses, e.g, a new screen technology whose R&D needs to be paid off.

If B&N struggles with a price point of $149 for its device and Amazon makes a profit with $139, why did B&N come to the price war in the first place? I think B and N would have known if Amazon was making a profit or not. I'd say B&N knew that Amazon was breaking even at that point, and they made a bold step they didn't imagine Amazon could counter.

The nook has a second screen and has also just come out of development. Amazon had a lot more time to recoup is development costs. Also, there's volume to consider.

[boswd]

Originally Posted by carld

I would guess that it isn't the Nook dragging B&N down but rather the other way around. It's B&N's incredible shrinking profits from their B&M stores that's dragging the company down. For all we know the Nook may be turning a decent profit for B&N.

Connecting B&N's struggles to the Nook's price point, and extrapolating therefor that Amazon can't be making a profit on the Kindle either is just too much of a stretch for me. I could be wrong, but I don't think so.

I think you are on the right track. First off there is alot of speculation and armchair wall street analysis going on.
I do think their brick and mortar stores will eventually be phased out or re transformed into something that is not that recognizable to what we see today. Maybe more retail items and gadgets and cards and candles and the NY Times Best sellers and Nook Cafe's

I do think BN's knows it's future is in the e-reader, apps and e-books store. They have showed in the past 8-9 months their agressive approach to this market, and they seem committed to this being their future.
Their e-book store has imroved by leaps and bounds since it's inception
They just rolled out NOOK Study,
They just announced they are dedicating more space for the Nook device itself a show room if you will.

They just release the nook app for Android and worked hard with Apple with their BN App for iPad and iPhone.

They just released the Nook wi fi only

Remained commited to software updates on the nook, 4 upgrades in 8 months is very impressive indeed and sends a message that we care and are listening.

This isn't a "Ahh lets throw in the towel and sell the joint". Decisions like this aren't made overnight.

These are some strong commitments and aggressive approaches to the e-book world that have just recently been announced.

I think the BN name will continue and be competitive in the e-book world and are looking for a strong buyer/investor to come in to help along with this commitment.

This isn't some going out of business sale but haven't said that I do think the future of it's Brick and Mortar stores are going to changed dramatically in the years to come.

[AndyfromVA]

Let's not forget there are still plenty of people who love books (not e-books) and need to handle them. So there will still be a market for regular book sellers. But those huge B&N stores are simply not viable.

[Fbone]

http://seekingalpha.com/article/2158...t-barnes-noble

$510 million in debt and company announces zero cash flow.

Adding to debt better pay off.

[boswd]

Originally Posted by Fbone

http://seekingalpha.com/article/2158...t-barnes-noble

$510 million in debt and company announces zero cash flow.

Adding to debt better pay off.

zero "Free" cash flow, not zero cash flow.

they are not the same.

The artilce said it was a forcasted zero free cash flow.