WSJ: Investors Are Freaking Out About Barnes & Noble

[HistoryWes]

Originally Posted by GreenMonkey

I still think the death of bookstores is over-exaggerated. With Waldenbooks, Borders and B.Dalton gone, who's left to sell books besides B&N?

That said, I would expect rather than the enormous size of B&N stores, we would see a reduction in size to more stores of the size that Waldenbooks and the like were before. I can't imagine why we would have stores the size of a Sears selling books...not enough to prosper, anyway.

Nobody is left. That's kind of the point. Not an exageration.

You're probably right about the smaller stores doing well, unfortunately I haven't seen many instances of a company successfully remaking itself in that way fast enough to avoid bankruptcy. Look at Borders, Blockbuster. The only one I can think of is Woolworth (now Footlocker).

[Gotadimple]

Originally Posted by SensualPoet

It could be B&N is trying to figure out how to simply raise cash to save the core business.

I agree with you, especially when you add to it the other posting in News here that they are also looking to sell their Sterling Publishing subsidiary.

[Suzanna]

B & N wants to go international with Nook. With Amazon and Kobo already making great gains in the international market, they have to jump in now or end up trying to play catch up later. I don't really know much about business, but wouldn't spinning Nook off into its own company raise its value and perhaps help them to gain the capital they need for that expensive enterprise? I know that's one of the reasons why Indigo sold Kobo - they just do not have the finances to fund international growth on the scale Kobo is hoping to see.

[SensualPoet]

B&N is, indeed, looking for a suitable non-US partner to expand its Nook business. It's possible spinning off Nook as a separate company would help that.

The US market is pretty big as it is: B&N could thrive nicely as a US-only player if they can drive costs out of their retail business. What you don't here B&N management ever talk about is what they are doing to gracefully downsize the bricks and mortar business. In real terms, in real time: renegotiating leases to smaller floor area would be a start; looking for expansion opportunities as mini-mart type locations; finding their voice vs. Books-a-Million and other regional players.

[Fbone]

Looks like B&N is "Netflixing" or "Indigoing" by attempting to separate digital from physical. For one company it may work the other it didn't and they combined again.

B&N going international will be costly. Forming separate companies in these regions will be easier and cheaper if only selling (licensing) digital products like Kobo. I doubt B&N wants to sell physical books in various countries which they would then need warehouses and higher administrative and personnel costs.

[nesler]

Here's the problem with downsizing stores--when a store shrinks down like that, what's going to go away, the obscure stuff, or the bestsellers? The obscure stuff. So they're going to be offering bestsellers, with a smattering of other works.

So then they'll be competing with Target, Walmart, etc. And that's dangerous on two fronts. (1) People go to a big box store for a lot of reasons. So they get a LOT of exposure to the books that are being sold. (2) B&N can't undersell the big boxes.

If they keep the big stores, they're screwed. They can barely afford their leases as it is.

If they go to a small stores, they're going to die the same death that Waldenbooks did.

Either way, they're dead.

[tubemonkey]

Originally Posted by nesler

Either way, they're dead.

Long live BN.com

or Nook.com

[abookreader]

I don't hold much hope for B&N bricks and mortar outside of a small coffee house, small selection type of store. They can attempt toys and whatever else to try and make those lease payments, but the fact remains that they still can't compete with Amazon online and they can't compete with Target and WalMart in bricks and mortar.

It seems to me like they're trying to jettison off the unprofitable segments of their business so they can eventually bankrupt them without harming the golden goose of Nook.

[tubemonkey]

How about Nook/Starbucks stores in the malls?

[markbot]

Old people read a lot more than young people. Old people have a hard time buying items online. The bricks and mortar business still has some life, but a business plan based around old, dying people who are not savvy enough to realize the prices are terrible is not so great.

(sorry if I offended anyone...I was trying to be funny...)

[fjtorres]

Originally Posted by SensualPoet

Kindle was relentless with very simple mass advertising: the Kindle is wonderful and its $79. The moment someone wonders into Best Buy looking for a Nook and it's drastically more than $79 -- never mind it is more capable -- the sales conversation gets muddied, diverted or lost altogether.

The problem is the current *volume* customer base is the recreational reader. At $200-plus, it was dedicated readers; at $79, it expands to include younger readers and the occasional reader. Neither audience really *needs* the added capabilities. Talking about "more capable" pales before "solid, simple, and capable-enough" plus mindshare. (and "cheaper" sure doesn't hurt.)

And now, to the mix, add in the chilling FUD-effect of "B&N is going to sell off Nook because sales fell short". (Even if that's not quite what they said.)

B&N had a disappointing fourth quarter? Wait until the *next* quarter...
Whatever they're going to do, they'd better do it quickly. They can't afford a repeat of last year's "B&N is up for sale... and nobody want to buy".

And whatever they do, yes, they need to discuss what they're going to do with the 700-plus storefronts. One thing Indigo did right: they acted first, announced later.
The reverse is NOT.A.GOOD.MOVE.

[jofallon]

Nook is a money-losing business, unlike the retail part of BN. Amazon may lose money on the Kindle fire etc, but the web store is well-supported by the rest of the Amazon business. The Kindle infrastructure is already paid for by the rest of the very profitable business. BN has to pretty much fund the ebook cloud and software infrastructure from scratch. Any third party buying the Nook would have to do the same.

[Kali Yuga]

Well, I'm freaking out over this, and I don't own B&N stock or a Nook.

Originally Posted by Sao

B & N wants to go international with Nook.

B&N has been too busy shoveling money at Nook development to "go international."

It's a huge mistake for them to even consider that move. They don't have a significant international presence or brand. International sales are expensive, complicated, and present diminishing returns. The US alone accounts for 25% of the world market; if they can't survive here, they won't survive by providing services to Sierra Leone.

Originally Posted by Sao

wouldn't spinning Nook off into its own company raise its value and perhaps help them to gain the capital they need for that expensive enterprise?

Splitting off the Nook is basically a death sentence for the brick and mortar division.

As people buy more and more ebooks, the physical bookstores lose sales, and can't keep stores open. Fewer stores mean lower sales, less shelf space, and less association of "buy books" with getting into the car, driving to the mall and browsing for a physical object. CD sales were probably around 25% of the market around the time that the record store chains died. (afaik physical CD sales are still close to 50% of the market, though it could be less - figures for 2011 should be out soon)

B&N will survive as a shadow of its former self -- as a bit player in the digital market, and perhaps running college bookstores. Maybe.

[mersfire]

Originally Posted by SensualPoet

It's also worth underlining how much the 2011 absence of Amazon in the "touch reader" space allowed other players an opportunity build their businesses (Nook Touch, Kobo Touch and, sadly, missed opportunity for the then over-priced Sony PRS series). At least, until November ...

The moment Amazon rounded out their line-up with a Kindle Touch -- B&N felt the impact directly. The Kindle with Special Offers pricing probably did the most damage. Kindle was relentless with very simple mass advertising: the Kindle is wonderful and its $79. The moment someone wonders into Best Buy looking for a Nook and it's drastically more than $79 -- never mind it is more capable -- the sales conversation gets muddied, diverted or lost altogether.

I'm always amazed at what great marketing can do for a company. Amazon is touting $79 for Kindle, $99 for Kindle Touch (both with special offers) and $199 for Kindle Fire (8GB).

The Nook Simple Touch sells for $99 now (without ads, but does anyone care?) and the Tablet sells for $249 (16GB).

Am I the only one that sees this as being exactly the SAME pricing for their products? If I wanted an 8GB tablet, I'lll pay $199 for the Fire and if I need 16GB, I'll pay $50 more for the Tablet.

But all I read about is how the Kindle is now $79 (no touch) vs $99 for the Nook and how $199 is $50 less than $249 even though B&N gives us 8GB more internal storage PLUS and expansion slot.

Maybe B&N just needs to join the marketing game and offer some bare bones, stripped down products to compete for the mind-share of bloggers/analysts/reporters. I don't like it as a consumer, but from what I constantly read online and in the papers, it sure seems like the rest of us only focus on the lowest price offering a company has.

[afv011]

Originally Posted by mersfire

I'm always amazed at what great marketing can do for a company. Amazon is touting $79 for Kindle, $99 for Kindle Touch (both with special offers) and $199 for Kindle Fire (8GB).

The Nook Simple Touch sells for $99 now (without ads, but does anyone care?) and the Tablet sells for $249 (16GB).

Am I the only one that sees this as being exactly the SAME pricing for their products? If I wanted an 8GB tablet, I'lll pay $199 for the Fire and if I need 16GB, I'll pay $50 more for the Tablet.

But all I read about is how the Kindle is now $79 (no touch) vs $99 for the Nook and how $199 is $50 less than $249 even though B&N gives us 8GB more internal storage PLUS and expansion slot.

Maybe B&N just needs to join the marketing game and offer some bare bones, stripped down products to compete for the mind-share of bloggers/analysts/reporters. I don't like it as a consumer, but from what I constantly read online and in the papers, it sure seems like the rest of us only focus on the lowest price offering a company has.

Well said, you've hit it on the head.