How does Barnes and Noble respond?

[SensualPoet]

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.

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?

[jocampo]

@SensualPoet,

I think you're missing my point.

B&N main business is books. Amazon does not. You can find motorcycles jackets on Amazon, books, toys, you name it.

Now, if B&N, as per your previous comment, was doing well this year, that is not what the stock shows and what even managers were saying few months ago. In fact, they are not, they are losing money, regardless of how many NC they sold. It's not a profitable as it was before.

I would love to see B&N for a long time, but they are not doing well and will have to do something very quickly, otherwise, will be out of business in a year or two. I truly wish I'm wrong about my assumption here, I truly do.

[Fbone]

The digital division may never be profitable. With more and more people "downsizing" their purchases from $12.99 to FREE and/or $0.99 there is little, if any, profit to be made. I suspect they break even at the $2.99 price level.

And we are now conditioned to expect new hardware every year. Mucho dinero.

[jocampo]

Originally Posted by Fbone

And we are now conditioned to expect new hardware every year. Mucho dinero.

Muchisimo, diria yo!

[Fbone]

Usted puede decir

[Tony1988]

Originally Posted by jocampo

@SensualPoet,
I would love to see B&N for a long time, but they are not doing well and will have to do something very quickly, otherwise, will be out of business in a year or two. I truly wish I'm wrong about my assumption here, I truly do.

I wouldnt want to to close anytime soon as well, but it may happen. Or at the very least change into something else.

Truth in the words. "Nothing lasts forever".

That will include Amazon one day as well.

[stonetools]

I think reports of B&N's response are greatly exaggerated, just yet.

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).

Sure... because B&N had to build its digital business up from zero a few years ago. The upfront investments in R&D will be paid off over time.

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?

Is there such a plan? OF COOOOOOOOOUURSE.
Is now a horrible time to announce it ? Double OF COOOOOOOOOUURSE.

Right now, B&N's best course is to project confidence ( " We can take Amazon's punch. And we've got an October surprise of our own"). They'll roll out the NC2 ( " better than the KF.... which copied the NC1") and hang on. They can hope that the digital division gets profitable and pulls them out of the ditch, while they stealthily implement their plan to close down the unprofitable stores. Will this work? Maybe not... but it's the only shot they got.

While there are reasons to be cheerful, I'm realistic. There are MORE reasons to be pessimistic. I think in five years there may be just three ebook stores-Amazon, Apple and Google. The shrunken pbook trade will be divided up among independents.

[SensualPoet]

Originally Posted by SensualPoet

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).

Originally Posted by jocampo

Now, if B&N, as per your previous comment, was doing well this year, that is not what the stock shows and what even managers were saying few months ago. In fact, they are not, they are losing money, regardless of how many NC they sold. It's not a profitable as it was before.

I have no idea where you get the idea I ever claimed B&N was "doing well" ... I definitely believe B&N has an uphill battle to survive the next 36 months.

Originally Posted by stonetools

Right now, B&N's best course is to project confidence ( " We can take Amazon's punch. And we've got an October surprise of our own"). They'll roll out the NC2 ( " better than the KF.... which copied the NC1") and hang on. They can hope that the digital division gets profitable and pulls them out of the ditch, while they stealthily implement their plan to close down the unprofitable stores. Will this work? Maybe not... but it's the only shot they got.

Most public companies have a public strategy / plan of how they intend to get from A to B. My point is B&N has nothing that I have seen that gets them from 1300+ currently barely profitable stores to somewhat fewer and somewhat more profitable stores. It represents $6 billion of their $7 billion business. If management isn't addressing that, its hard to imagine them suddenly being successful.

Nook Color has done well in terms of brand positioning; Nook Color 2 no doubt will continue to help; but B&N still needs to demonstrate it can actually make money with it.

[voracious71]

Some of the new Kindles may not be all that revolutionary, but Amazon has a reputation of putting out good products with excellent customer service.

I have had Kindles since they first came on the scene. My K1 still works, my K2 still works. I had a shipping issue that wasn't even Amazon's fault( stupid UPS) and they refunded me the one day shipping I had paid for and didn't get. My friend broke her Kindle screen by sitting on it-she called Amazon, they replaced it. There are hundreds, maybe even thousands of cases like this. B&N needs to step up their CS if they want to stay competitive, IMO. I dread calling Nook CS- it's downright painful.

[voracious71]

Originally Posted by boswd

Why do hate Barnes and NOble so much?, I just find it so bizarre.

I don't hate B&N. I don't think most of us here do but we're just being realistic. Businesses cant afford to sit on their laurels- that won't work anymore.

I want to see B&N answer this announcement with something fantastic. I want them to stay afloat.

[MV64]

Rumors on the "street" are: new nook Color, plus a full tablet unleashing the full fury of Android.

I don't know what to believe, really. Over the past year I've heard that BN's digital sales were amazing and gobbling up market share, then I read articles saying they're nowhere near Amazon. I know the stores aren't doing well, but they're expanding to include games/toys, which sell well, as well as a big expansion in the digital portion of the stores.

One would think there's going to be some constricting going on physical-store wise no matter what in the coming years. They've found they don't need 4 stores in a 30 mile radius anymore.

[DrDln]

Originally Posted by voracious71

I don't hate B&N. I don't think most of us here do but we're just being realistic. Businesses cant afford to sit on their laurels- that won't work anymore.

I want to see B&N answer this announcement with something fantastic. I want them to stay afloat.

I agree, BN has a lot to catch up. Even their discussion boards are not anywhere close to Kindle boards. Their sale of digital books used to be good but it is going down.. Amazon is quite aggressive now with kindle fire...

[stonetools]

One solution-Apple buys B&N, closes down the unprofitable stores, turns the rest into Apple Stores, merges Nookbooks into iBooks-there! Problem solved!.


What's Kobo going to do? A tablet, yes.... but are they any better set than B&N?

[Grimm]

Originally Posted by SCION

Bingo! It doesn't matter what hardware is unveiled on the next NOOKcolor. The content or lack thereof is the same. Unless you want nothing to do with anything Amazon or .mobi/.azw, the choice is obvious. Plus you get to save $50 with access to more ebook titles.

Those are bold statements to make without knowing what the NC2 will or will not have. Are you honestly saying that the NC2 can't possibly top the Kindle Fire? How can you make that statement with any degree of certainty? And how can you know the price already and how much will or will not be saved?

Also, the last chart I saw showed 2 million ebooks available for Nook whereas Kindle had 950,000 unless I misread that. What is this "lack of content" you're referring to? Apps maybe (but again what the NC2 will have access to is as yet unknown) but certainly not books.

[SCION]

Originally Posted by Grimm

Those are bold statements to make without knowing what the NC2 will or will not have. Are you honestly saying that the NC2 can't possibly top the Kindle Fire? How can you make that statement with any degree of certainty?

Also, the last chart I saw showed 2 million ebooks available for Nook whereas Kindle had 950,000 unless I misread that.

Where are they getting music and videos from? How many apps do they have now? I haven't been following since I rooted mine, but isn't it no more than 800? Many (bn.com forum) seem frustrated that too many apps are for children. If they're going to offer Netflix and Hulu, then that would definitely get lots of attention from those considering a Kindle Fire. Folks have been hyping a new NOOKcolor, but there's been no discussion of content. Amazon had content before they brought a device to market.