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

[kjk]

http://finance.yahoo.com/news/Barnes....html?x=0&.v=1

Barnes & Noble, Inc. (NYSE: BKS - News), the world’s largest bookseller, today announced that its Board of Directors intends to evaluate strategic alternatives, including a possible sale of the company, in order to increase stockholder value.

[fjtorres]

Sounds like they're looking to take it private.

[brecklundin]

would Apple have anything to gain buying B&N?

[rogue_librarian]

Why should they? They're in the business of selling pretty devices, content is just a means to that end.

[brecklundin]

Originally Posted by rogue_librarian

Why should they? They're in the business of selling pretty devices, content is just a means to that end.

hardly an answer to my quesiton...you know as in answering a question with a question. And in your case asking a question to justify the initial question. If I knew the answer I would hardly need to ask the question in the first place, yes?

[kjk]

Originally Posted by brecklundin

would Apple have anything to gain buying B&N?

I don't think so...if B&N had a decent share of the eBook market, maybe. But all those brick and mortar stores? And physical book inventory?

It will be curious to see what they come up with-spin off the eBook business? Make the eBook/Nook business their only business and sell the rest? Go private?

edit: Wow, their market cap jumped from $756 million to almost $960 million AH (and after that news). Amazon's market cap? $55 billion.

[SensualPoet]

@brecklundin: No, Apple has nothing to gain by buying B&N. They have no experience in the physical book business -- 2000 retail outlets across the US. There are some synergies, yes: but B&N does not give Apple any more access to content -- which it might if it purchased Bertelsmann, for example. At best, Apple might run B&N as a hobby.

* * * *

Market cap jumping 25% is a straight line function of the stock price rising from $12 to $16 thanks to a handful of shares trading once the markets are closed. That's not a wow.

In addition to the press release in the OP, here's a Reuters story: http://www.nytimes.com/reuters/2010/...e.html?_r=1&hp The nub of the opportunity is the investor founder, still holding the most shares, is considering ways to exit or enhance his current holdings by making the stock more "liquid" than it is.

The main question is whether you believe B&N needs access to more capital -- which fresh shareholders could provide -- or if it needs new brains at the top to re-think the business direction. Or, perhaps, it needs both. To the extent that senior management is distracted by "putting the company in play", it is a potential risk in the medium term and surely this is a point in the e-book and book retailing industry where all hands need to be on deck and operating with a common vision.

[kjk]

Originally Posted by SensualPoet

Market cap jumping 25% is a straight line function of the stock price rising from $12 to $16 thanks to a handful of shares trading once the markets are closed. That's not a wow.

Well yeah, that's how I calculated it. If you don't think a 25% jump AH for a stock is a wow, then you must not own B&N stock

[SensualPoet]

Sure, it's nice if I owned the stock at 3pm today. But on May 4th is was worth $22, not $16 ... and it was worth $24 a year ago. Long-time shareholders -- or even anyone who purchased it before the five year low of $12 it is currently experiencing -- aren't jumping for joy. No wonder folks are looking for an exit.

[fjtorres]

Originally Posted by SensualPoet

The main question is whether you believe B&N needs access to more capital -- which fresh shareholders could provide -- or if it needs new brains at the top to re-think the business direction.

Or that the top management has identified necessary steps that would risk their control if they were undertaken by a publicly-traded company so they are looking to take it private, restructure, and then go public again later.

The NYT/Reuters article quotes:

Forrester analyst James McQuivey said the potential bid by Riggio could signal that hard decisions needed to be made that would be more easily reached as a private company.

"They might feel they want to buy the company back now and take it public later and reap the windfall," he said.

B&N *needs* to shed B&M stores. A lot of them.
They need to shed staff.
They need to move (fast!) to online for both e- and p-books.
None of these are things they can do in a quarter or two so if they retrench while spending heavily on the transition, their stock price wil take a beating, leaving vulnerable to a hostile takeover.

As the magic 8-ball would say:
"all signs point..."

[kjk]

Originally Posted by fjtorres

As the magic 8-ball would say:
"all signs point..."

to that damn $139 Kindle?

[SensualPoet]

Originally Posted by fjtorres

Or that the top management has identified necessary steps that would risk their control if they were undertaken by a publicly-traded company so they are looking to take it private, restructure, and then go public again later.

Taking the company private, or broadening the shareholder base, isn't the decision of management -- it's the decision of the shareholders and board of directors. In B&N's case, the founder is the chief (minority) shareholder.

B&N is a complex puzzle: Leonard Riggio is founding shareholder; Ron Burkle holds 19% of the company and has recently been suing the company (and the board) because it enacted policies making it expensive for Burkle to acquire a larger share. Stephen Riggio, Leonard's brother, was forced to resign as CEO in March partly because of Burkle's activism and the continuing poor performance of the stock.

Going private may be a very good thing, provided they have continued access to enough capital to re-invent themselves. They have about 1500 stores (I previously stated 2000 in error) and a very deep connection into college book distribution -- a unique niche market. Nor is it necessary to slash staff and stores ... the public has hardly abandoned buying physical books. B&N's problem is less that it isn't making money but that it isn't making enough. That's execution, from warehouse to check-out, and a solvable dilemma. But it might take the merchandising skills of a Sam Walton, as opposed to someone living in St Mary Mead's, to drive those profits.

[J. Strnad]

I suppose that, to people in the know, "evaluating strategic alternatives" is a meaningful phrase.

[fjtorres]

Originally Posted by SensualPoet

Taking the company private, or broadening the shareholder base, isn't the decision of management -- it's the decision of the shareholders and board of directors. In B&N's case, the founder is the chief (minority) shareholder.

Odds Riggio would be making the move if he *didn't* have a deal lined up?
That's how those boys operate: first they line up the deal, then they go through the motions.

[davidspitzer]

Originally Posted by rogue_librarian

Why should they? They're in the business of selling pretty devices, content is just a means to that end.

according to their balance sheet last year they sold nearly a billion dollars in music, music movies and mobile apps, sounds like content is doing ok for them