Phil Rubin

Barnes & Noble Puts Out 'For Sale' Sign

August 9, 2010

FROM RETAILWIRE:
Describing its stock as "significantly undervalued," Barnes & Noble (B&N) last week essentially put itself up for sale. As e-books erode its brick & mortar business, pressure from shareholder activists were said to have prompted the move. What do you make of the struggle for control of Barnes & Noble?      [more...]

B&N's problems, among others, is that for many consumers of content--in the form of books--they are increasingly irrelevant compared to Amazon. Their other problem is that Amazon is and will remain the leader in ebooks. Finally, their problem is that Amazon is obsessed with customers and B&N isn't.

Going private is the only option for B&N, assuming they can strike a deal, which is not always easy when you have two large shareholders that not only don't get along but probably also have unrealistic expectations about valuation.

More than anything, B&N largely failed to adapt to the new economics of information. This goes beyond what they sell--content and information--and in what form. It goes to the very core of their business.

That's where Amazon is so fundamentally different that success for B&N is no better than number two in a declining market.

Amazon developed its business specifically for the new economy. It has leveraged data and information in ways that very few other retailers have done. And yet it's not just about data and information. For Amazon is starts and ends with customers.

While people may get tired of hearing it, Bezos is among the few CEOs of major retailers that obsesses with customers. This is what ultimately makes the difference and that distinction is what makes Amazon attractive for equity buyers and B&N only attractive for hedge funds pursuing long/short strategies.

As someone else points out, fortunately for B&N there's Border's!