Barnes & Noble puts itself up for sale | Hacker News Reader

Barnes & Noble puts itself up for sale

marketwatch.com

28 pointsgrellas30 comments

To me, it is pretty fascinating to see how Barnes & Noble has fared versus Borders (now only 1/10 of BN's market cap).

Borders made a number of miscalculations that have really cost them dearly. They passed up on running their own online store -- outsourcing it to Amazon, but worse they bet big on selling media merchandise at their stores (DVDs, CDs, Games). I am sure originally the media decision worked, but as CDs died out (and DVD sales are dropping off), they were screwed.

Barnes & Noble on the other hand went with their own online store and bet bigger on having their own publishing arm (plus a college textbooks biz). Obviously in the longer run this has worked out but they are still facing extinction. I imagine that bookstores will still continue to exist going forward, but they will be far fewer in numbers akin to record stores. My guess is that Ron Burkle was going to make a play for the whole company so Riggio had to quickly react with his own potential offer (note the language he used in the press release).

Some people will try to play up the store real estate value aspect of these companies but I think that is not a good angle. Borders / B&N have -huge- stores on a sqft basis. That presents a big problem for potential businesses looking to purchase a location. I think the stores are most appropriate for maybe furniture stores but those are still recovering from tough times during the crisis. I don't expect them to start investing any time soon.

What's worse is that their stores are in more well-to-do (i.e., well, or at least better, read) suburbs and exurbs, so you can't do a "package sale" to any company who's doing well in this environment (Dollar Tree or Big Lots, for example) to take up space there, as the property owner and neighboring stores in the strip would balk at the idea of their anchor store going downmarket. So, they'll have to pawn each property off piecemeal, which is much more laborious.

>but worse they bet big on selling media merchandise at their stores (DVDs, CDs, Games).

B&N did experiment with this market, though; keep in mind that they owned Gamestop up until 2004.

> Leonard Riggio, the company's founder and largest stockholder, has informed the Board that, in light of its decision to explore strategic alternatives, he intends to consider the possibility of participating in an investor group to acquire the company

For those curious how Riggio, born in 1941, could be a founder of a company formed in 1873, it appears that Riggio's bookstore company bought Barnes and Noble in 1971, and adopted its name.

Wow, I figured it would take someone huge to buy them, but it turns out their market cap is only $755M. Amazon's is $54B

I wonder if Amazon would have any use for them?

Amazon has typically refused to acquire any company that would expose it to nationwide (or even Californian) sales tax.

Agreed, but to my confusion Amazon has been very aggressive in competing with B&N. Every price drop of the Kindle in the last 9 months has seemingly been in response to a price drop of the Nook (B&N's e-reader). Given that B&N is like a gnat on Amazon's elephant, I haven't been able to figure out what is going on.

So it wouldn't surprise me if Amazon somehow got involved here, perhaps in a way that would avoid the sales tax issue.

Market share.

Sounds like an anti-trust problem.

It's as if B&N suddenly realized, "We're mostly selling just bits and bytes, but at a heavy markup and with tons of warm bodies and brick and mortar. The Internet is going to eat our lunch. Holy shit!"

Except the rest of us realized this years ago.

That said, there are still things about a physical bookstore that the Internet doesn't "do better/cheaper". One is the pleasure of perusing the bookshelves. Second is the social factor of seeing other folks there and striking up conversations. Third is the Starbucks-like factor: every B&N I've been to seems to have a mini-coffee shop inside of it, complete with tables and snacks and power outlets. Very smart move, because we still can't download tables or coffee over the Internet, let alone for free.

B&N have been doing a good job not only selling their e-reader, but bringing the nook readers into the store by various promotions (show your nook and get a free book, show your nook and get free coffee) and the ability to browse any e-book on your nook while physically in the store. Clearly a lot of thought has gone into the nook in-store experience.

So I can see how bookstores could survive as essentially a book showroom and congregating space. Of course you don't need as much square footage for that, which would also lower costs.

It's true, I can flirt in person at B&N, and Amazon.com provides no such functionality! I go there for the experience of getting out of my house and walking around in the presence of actual people (I work from home). The coffee shop isn't really as inviting as Starbucks or Caribou, though, in my locality, though it is nice enough. They just stopped charging for wifi a few months ago.

Same here, and I also often work from home or coffee shops.

I live in suburban Colorado and there are 3 places nearby I can go to almost assuredly see good looking women on a daily basis, even weekdays, even the middle of the day: Target, B&N and Starbucks. (Target is the most reliable, for whatever reason.) Walmart tends to have the worst looking women, so even if I could get groceries there a few cents cheaper per item, it's just not worth the impact on my overall quality of life.

One advantage to B&N over Starbucks is that at Starbucks I feel obligated to buy something as micro-rent for the table space, even if I'm not hungry/thirty. At B&N I have the excuse of browsing for books and magazines, so every trip can be free, guilt-free. Starbucks has awesome bathrooms though, and lower chance of screamers, er, I mean, kids.

755.71M market cap - 510.40M debt - would be an interesting way to instantly get a lot of retail locations (700+ stores and 600+ campus stores).

I guess I should expect the Apple and Microsoft sites to contemplate each companies purchase. Probably some HP action in there too (so they can be more like Apple).

You seem to be assuming they own all of their retail stores. Is this true?

On their balance sheet, under assets, they record about $812M worth of value for their net property, plant, and equipment. With 720 store locations that comes out to about $1M in value per store. That's probably understated by a lot because of the excess depreciation charge they take.

I would humbly submit that PP&E likely is dominated by warehousing facilities and books at a place like B&N. It may include some real estate, but I wouldn't bet on it representing the value of 720 store locations, even with aggressive depreciation schedules.

I would bet their PP&E likely has a large emphasis on esoteric distribution equipment, as well as some stores. I am just wildly speculating though: the business of selling books is too crappy (low cashflow yeilds) to get me interested enough to crack open a 10-k.

There's one at a mall near me... that's definitely leased.

Most of the Apple stores are leased also.

You can safely say that about every chain that is found in malls and shopping centers.

I'm not assuming that. I assume they lease a lot of their space like everyone else.

I could see Microsoft buying B&N just because all the other cool kids are doing e-books and they're interested in getting into retail. No reason you can't sell Xbox 360 hardware/games and phones next to a bunch of books.

I doubt Barnes & Noble would be a good fit for Apple, Microsoft, or HP; their stores are far too massive for a single-brand retailer. Perhaps some new competitor to Best Buy looking to swing for the fences?

I wouldn't expect them to stop selling books. I would expect an in-store area (much like they are planning for the nook) to display the companies wares (ex. HP PalmPad area with accessories).

One of the main reasons I'd go to a brick-and-mortar store is to be able to pick up a book that day rather than get it shipped.

Borders has nice kiosks you can use to look up where a book is, but at Barnes and Noble you have to talk to someone at the information desk and watch over their shoulder to make sure they're spelling the name of the book right, etc. Inconvenient.

Also, usually at brick-and-mortar stores, if they don't have something they'll say "but we can order it for you", which has never made sense to me. If I wanted to order it, I'd do so more cheaply online.

Bookstores also need to focus on the browsing experience and the immediate gratification aspect if they want to compete with Amazon.

The B&N I go to has touchscreen kiosks. I don't know if you can order straight from it or only check local inventory.

> Also, usually at brick-and-mortar stores, if they don't have something they'll say "but we can order it for you", which has never made sense to me. If I wanted to order it, I'd do so more cheaply online.

I did this when I was younger. The point was, I did not have a credit card. By ordering in the store, I could pay cash or use gift certificates.

(Ask a parent? Buy a prepaid debit card? Oh, you funny funny people.)

The edited title is very misleading, not only because it's a publicly traded company (and thus always for sale) but also because all they're really saying is "yeah we know we're plummeting, but don't sell your shares."

In this town in the UK, all the 2nd-hand bookshops are shutting down one by one due to Amazon's 'used book' sales. It's hard to sell a book for £3.50 when you can buy it from Amazon for 1 penny plus £2.75 postage.

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