Joel Warady

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...]

I would not write B&N off just yet. They certainly understand the challenges that they face, and more importantly, they are addressing these challenges. Let's look at what they have done over the last 24 months.

1. They have reduced their inventory of physical books to free up cash flow for their digital strategy.

2. They have introduced The Nook, and more importantly have introduced a platform for downloading e-books to multiple devices, including the iPad and the iPhone.

3. They have moved the Nook to be physically positioned immediately when you walk into the store, calling more attention to their transformation.

4. They have introduced free WiFi to their stores, creating the opportunity to become more of a destination, and to cause people to linger longer.

5. They have introduced the opportunity to access ebooks free of charge for reading, while you are lingering in their stores.

6. They have their own content provider in Sterling Publishing, which they own. They will be able to produce their own content to be available on ebook format.

7. They are one of the largest college bookstore management companies in the US, and as textbooks morph into ebooks, they are best positioned to take advantage of this opportunity.

8. They own the best physical locations in the US, something that amazon will never be able to replicate.

9. People still love buying ink on paper books, and B&N is strategically positioned to "own" this market.

With all that being said, I think Len Riggio wants to take the company private, because he sees all of the above as well, and knows that over time, he will be able to reposition the Company to take advantage of all of these changes. In the meantime, the company is a bargain right now. He will find the financial backers, and if he is able to take the company private, he will prove to be the big winner.