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Thread: Barnes & Noble Up For Sale

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    Elite Member BITTER's Avatar
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    Default Barnes & Noble Up For Sale

    Barnes & Noble on Block

    Bookseller Explores Options, Pressured by Low Stock Price and Digital Onslaught

    By JEFFREY A. TRACHTENBERGAnd DENNIS K. BERMAN

    Barnes & Noble Inc., put itself up for sale Tuesday, succumbing to pressure from shareholder activists as digital books erode the traditional business of the nation's largest bookstore chain. The New York-based company said a falling stock prompted its board to consider all "strategic alternatives, including a possible sale."

    Former Barnes Chairman Leonard Riggio may form a group to buy the company.

    The company said Leonard Riggio, its founder and chairman, is contemplating forming an investor group to buy Barnes & Noble, whose 720 namesake stores are a fixture in American cities both large and small. It sells approximately 300 million books annually.

    A few years ago, such figures represented a fearsome retailing force, attracting ire of rivals and publishers who fretted that one company controlled the country's book-reading tastes. Since then, it has been hobbled by larger technological forces, with books becoming mere digital files, peddled by anyone with an Internet connection. "Anybody with their eyes open knows that the retail book market is increasingly challenged," said Mike Shatzkin, chief executive of Idea Logical Co., a New York consulting firm. Each new report that shows e-book sales are growing more rapidly than expected only intensifies the problems facing the bookstore chains, he said.

    Today, Barnes & Noble has a market capitalization of just under $950 million—even after a 25% run-up in after-hours trading Tuesday in the wake of the announcement. In comparison, chief competitor Amazon.com Inc. has a market cap of around $55 billion. In 2001, Barnes & Noble was worth $2.2 billion and Amazon $3.6 billion.

    In a prepared statement, Mr. Riggio said he supported the board's decision. He was unavailable for further comment, and a spokeswoman for the company said that it would have no further comment on the situation. "Going head to head with Amazon and trying to become a different company with the same investor base is tough," said Mike Serbinis, CEO of Kobo Inc., an online digital-book seller in Toronto. "Going private would enable them to transform the business without the pressure of quarterly earnings. It's hard to make the transition that they are trying to make under the constant eye of the market."

    The sales process won't mean much for consumers right away. But a new owner may have a different strategy, potentially trimming the number of outlets as profits slide. Over the past three years, Barnes & Noble's annual profits have slid from $135.8 million to $75.9 million to $36.7 million.

    The 69-year-old Mr. Riggio currently owns 17.9 million shares of Barnes & Noble stock, or 29.9% of the shares outstanding, making him the largest individual investor. Mr. Riggio's once-tight grip on the company has come under serious challenge in recent months after investor Ronald Burkle acquired just over 19% of Barnes & Noble's stock. Another investment firm, Aletheia Research & Management has also been amassing the stock and now owns nearly 16%.

    The move sets up a potential showdown with Mr. Burkle, who objected to Barnes & Noble's acquisition of a privately held college bookstore unit from Mr. Riggio. Today that business has 637 stores. Mr. Burkle also indicated he may nominate rival board directors this year, potentially unseating Mr. Riggio himself. Mr. Burkle is also a potential buyer for the chain, as he said he is interested in purchasing additional shares and has talked about Barnes & Noble's uniqueness as a retailer, people familiar with the matter said.


    People walk by a Barnes & Noble store in Brooklyn, New York.

    Mr. Burkle's office didn't return calls seeking comment. Possible buyers for the retailer are private-equity firms, people familiar with the matter said. Barnes & Noble still has a strong brand name that would make an attractive purchase, especially if bidders see potential in its digital strategy, they said.


    One literary agent, Laurence Kirshbaum, noted that the "assumption is that they have sufficient working capital to do what they need to do, post any buy-out." However, he added that there are many imponderables, including the final cost of going private. In late June, Barnes & Noble sounded a warning note, saying that future investments in digital technology, sales and marketing would have an impact on profits in 2011. Over the course of the following month, its stock fell to $11.95 from $16.23. That drop caused the board to decide over the last month that it should explore a possible sale of the company, which is now in the early stages, people familiar with the matter said.In after-hours trading, Barnes & Noble shares climbed 25% following the company's announcement. The shares have a 52-week high of $28.78. In trading on the New York Stock Exchange on Tuesday, shares had closed at $12.84, down 98 cents, or 7%.

    Mr. Riggio launched his first bookstore in New York City in 1965, and six years later acquired Barnes & Noble Inc., which then consisted of a single store. He then used a discount strategy focused on new best-sellers to help spark the growth of the hardcover format. Intent on additional growth, Mr. Riggio acquired the mall-based B. Dalton Booksellers and then in the early 1990s began to focus on building superstores. Today Barnes & Noble is present in virtually all of its biggest communities and many of its smallest, its stores often serving as community centers where book clubs meet and parents bring their children for story reading Barnes & Noble last year made significant investments in digital bookselling, including the launch last summer of its own e-bookstore, followed by the unveiling of its Nook e-book reader. But the fast-growing digital landscape is increasingly crowded. Amazon.com Inc. grabbed an early advantage with its Kindle e-reader, introduced in November, 2007.

    Then earlier this year, Apple Inc. launched its iPad tablet, as well as an electronic book store. Apple has now sold more than 3 million iPads, and has claimed a share of the fast-growing digital books marketplace.

    Borders Group Inc., the nation's second largest bookstore chain as measured by revenue, jumped into the e-book business earlier this year, and Google Inc. is expected to soon launch its own e-bookstore, Google Editions.

    Mr. Shatzkin, of Idea Logical, said Borders recently acquired a new investor and recapitalized, and that this may have had an impact on the Barnes board as well. "Starting with the iPad, everything that is moving things to e-books faster is bad news for bookstores," he said. "Borders has bought more time. At the same time, Barnes is in a battle with a very powerful guy, and that's draining cash and energy as well."

    —Gina Chon and Anupreeta Das contributed to this article. Write to Jeffrey A. Trachtenberg at jeffrey.trachtenberg@wsj.com and Dennis K. Berman at dennis.berman@wsj.com

    Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

    Never thought I'd be sad to see one of the big chains go...maybe Borders will snap them up?
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    Elite Member MohandasKGanja's Avatar
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    Border's won't buy them -- Border's is in worse shape than Barnes & Noble.

    My kids are going to grow up never knowing what a big bookstore (or even a small one) is like. Weird.

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    Elite Member BITTER's Avatar
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    Quote Originally Posted by MohandasKGanja View Post
    Border's won't buy them -- Border's is in worse shape than Barnes & Noble.

    My kids are going to grow up never knowing what a big bookstore (or even a small one) is like. Weird.
    Mohandas, I miss the mom & pop bookstores like I would miss my left arm. One of my favorite ones packed up and closed last year. I almost took to my bed, I was so grief-stricken. A lot of the stuff I love is out-of-print, and/or hard to find; they used to order stuff for me, especially older books on black history and maritime history (the old picture books are near impossible to find). And I loved them for it.

    In how bad a shape is Borders' in? They always seem to be doing better, at least here in my city.
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    Elite Member MohandasKGanja's Avatar
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    Quote Originally Posted by BITTER View Post
    Mohandas, I miss the mom & pop bookstores like I would miss my left arm. One of my favorite ones packed up and closed last year. I almost took to my bed, I was so grief-stricken. A lot of the stuff I love is out-of-print, and/or hard to find; they used to order stuff for me, especially older books on black history and maritime history (the old picture books are near impossible to find). And I loved them for it.

    In how bad a shape is Borders' in? They always seem to be doing better, at least here in my city.
    In a Yahoo news item (about a month or so ago) Border's was one of 10 chains that was predicted to go out of business within a year. A previous item said that Barne's & Noble was stronger because they had a better on-line operation and they actually publish books, which would offset their bricks-and-mortar stores, which I guess aren't that profitable.

    I'm a big fan of bookstores, too (used and new). My wife is always dragging me out of them. I'm lucky enough to live in the DC area, which has a lot of interesting stores -- like Kramer Books, down in Dupont Circle. It's been a while since I've been there, though. But they had really challenging, interesting titles, that you wouldn't find anywhere else.

    My wife and I had our second date at a chain called "Bookstore Cafe", which combined a bookstore with a small restaurant. They were really cool, but kind of faded away about 15 years ago.

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    Elite Member BITTER's Avatar
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    ^^^Wow. I didn't know that. The Borders in my area is massive compared to the B&N, so I made the incorrect assumption that Borders was doing better. But B&N has the Starbucks cafe .

    I have been fortunate enough to have dated several "bookies" who tend to stay in the bookstores right along with me.
    I don't know if I want to try these electronic books or not. Guess I am too old and too set in my ways.
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    Elite Member Mel1973's Avatar
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    Oh how sad! I love books. I love to sit and flip through the pages. Cook books, mysteries, porn - I love 'em all and I hate to think that one day not too far off we won't be able to get REAL books. WTF, I hate you Progress!
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    Elite Member Butterfly's Avatar
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    One of my husband and I favorite things to do is get coffee and browse B&N. I'll miss it if they shut down.
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    Elite Member MohandasKGanja's Avatar
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    Quote Originally Posted by BITTER View Post
    ^^^Wow. I didn't know that. The Borders in my area is massive compared to the B&N, so I made the incorrect assumption that Borders was doing better. But B&N has the Starbucks cafe .

    I have been fortunate enough to have dated several "bookies" who tend to stay in the bookstores right along with me.
    I don't know if I want to try these electronic books or not. Guess I am too old and too set in my ways.
    I'm not wild about the electronic books either, even though I have a very techie-digital type of job. When I was a kid, there was no Borders or B&N - only WaldenBooks (later owned by Borders), and B. Dalton's (later owned by B&N). These stores were small and would be inside a mall. Seeing a Border's for the first time was a really wonderful experience.

    After reading the Borders Group wiki entry (Borders Group - Wikipedia, the free encyclopedia), they don't seem to be in as much trouble as I had original thought. I think they managed to pop-up with some cost-cutting moves and reducing some of their smaller stores.

    My wife and I liked to hang out at Tower Records and Books. Lots of cutting-edge books that I didn't see anywhere else, although the bookstore wasn't as big as B&N or Borders. Tower really got hid hard by downloading and digitization, and even the major record labels were pulling for them to survive, but they just couldn't go on.

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    Elite Member BITTER's Avatar
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    Tower Records and Books was great for the latest magazines and celeb bios. I miss it. And the one in Tokyo was amazing.
    Good luck getting a cat to do anything let alone join in on your sexcapades. - Air Quotes

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    Elite Member PoisonGirl's Avatar
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    Well, hell. I always go to B&N.
    “You never know what's around the corner. It could be everything. Or it could be nothing. You keep putting one foot in front of the other, and then one day you look back and you've climbed a mountain.” - Tom Hiddleston

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    Silver Member LucreziaBorgia's Avatar
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    I work at a B&N. We aren't going anywhere, and Riggio has this idea of 'book culture' that will keep stores much like they already are. B&N needed to find a way to get sagging stock prices up, and going in with an investor group is a good way to do that. Our stocks rose simply with that news.

    As for bookstores going by way of record stores... well, I can say just from the 14 or so years I've worked at our store that books aren't going anywhere just yet. At least not for a generation or so. People still like the tactile feel of books - plus a book will still be sitting on the shelf decades after the 'latest' gadget is long obsolete.

    Unless something really unexpected happens, B&N will continue on just like it is doing now.

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    Elite Member sprynkles's Avatar
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    I've had some wonderful dates with my ex-sweetie. We used to go there all the time, sit together in one of those big chairs and flip through books. Or sit in the Starbucks and people watch. Sniff sniff...really can't go in there anymore.

    Meryl doesn't even try anymore. She just calls Lanvin and asks for curtains with a belt.~Bitter
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    Elite Member BITTER's Avatar
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    Quote Originally Posted by LucreziaBorgia View Post
    As for bookstores going by way of record stores... well, I can say just from the 14 or so years I've worked at our store that books aren't going anywhere just yet. At least not for a generation or so. People still like the tactile feel of books - plus a book will still be sitting on the shelf decades after the 'latest' gadget is long obsolete.
    And NOTHING, IMO, will ever take the place of coffee table or books where pictures/graphics play a key role. I love ships, especially ocean liners, and I love those big coffee table picture books of the grand liners of yesteryear. I don't think that Kindle or any other gadget can duplicate that for me...
    Good luck getting a cat to do anything let alone join in on your sexcapades. - Air Quotes

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    i can't read electronic books. i tried on my ipod touch and then on a friend's kindle, and i just hate it. nothing replaces the actual book.
    with music i can see how cd's would no longer be essential except for total music nerds like me who like to own the actual cd if they really like the music, but with books i just can't see that happening, at least not for a while.
    i would hate it if that happened.
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    I downloaded Madame Bovary from Project Gutenburg, and had to print it out 'cause it was difficult to read it on a computer screen.
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