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Barnes & Noble Founder Wants to Take Retail Division Private

Posted by Unknown on from the that's-one-way-to-die dept.

The times haven't been the kindest to B&N: retail sales are down and the Kindle is outselling the Nook. Joining Best Buy and Dell, B&N might be going private. From the article: "Barnes & Noble’s largest shareholder, Leonard Riggio, made an offer Monday to buy out the struggling company and take it private ... Essentially, it would split the company in two: one half would be Riggio’s private brick-and-mortar stores and related assets, the other the publicly-traded Nook and college bookstore management division."

11 of 131 comments (clear)

  1. Blame the market bulls ... by oztiks · · Score: 5, Insightful

    Public companies are getting abused on the stock market so bad being private means they can actually run the business properly without having to worry about squeezing to make every Q more profitable according to analyst projections and "expected" profits.

    Apple should do the same but having 1bn outstanding shares at $400 a piece means even their whopping $130bn in the bank wont even save them from the onslaught.

    1. Re:Blame the market bulls ... by peragrin · · Score: 5, Interesting

      The trick is wall street MBA and EMBA's are basically stripping companies bare destroying assets for short term goals, and personal profits.

      Take Circuit city. The MBA's backed by wall street stripped the company to the bones, stole all the cash and pushed it into bankruptcy.

      After a bad year(2008) and falling stock prices circuit city management came up with a plan to cut expenses by $10,000,000 over the next 3 years. They fired the top 3,000 salesmen and hired 2,500 fresh salesmen in the summer of 2009. Wall street bounced the stock back up, and management paid themselves $5,000,000 in bonuses for that year.

      2009 ended with predicitably even lower sales.(firing your best salesmen does things like that).

      6 months later it was completely gone.

      Wall street supports and and encourages self destructive behavior. Wall street isn't about long term investing any more. It is about millisecond long trades taking up 75% of all trading volume.

      Seriously if wall street cut HFT for one day the volume would collapse.

      --
      i thought once I was found, but it was only a dream.
    2. Re:Blame the market bulls ... by CncRobot · · Score: 3, Interesting

      Close. Its the SOX rules, amongst others, that are killing a lot of public companies. Where I work we had public bonds before SOX became law and after that the quickest we could we got rid of them so we don't have to follow those rules.

      Of course after the story of MF Global and Corzine, I'm not sure why they bothered to pass SOX if they won't enforce the law in a textbook example of someone breaking it.

    3. Re:Blame the market bulls ... by TubeSteak · · Score: 4, Insightful

      That only happens with companies that are failing anyway. Its in nobody's interest to destroy a thriving business, or at least one that is worth more alive than dead.

      [Citation Needed]
      More importantly, you are making assumptions about what is and isn't rational behavior from your perspective.

      From the perspective of a corporate raider:
      Mortgaging a healthy company to the hilt and then selling off its assets is wildly profitable.
      They don't want to run the company and earn a respectable return on investment.
      They are not in it for long term profits.
      They want X00% return on investment within a few years and they can get it.

      Different motives and different agendas leads to different 'rational' behaviors.
      Hence regulation to reign in the more destructive, yet completely rational, actors.
      There was even a /. story today which showed us that 'rational' behavior is not a universal constant

      --
      [Fuck Beta]
      o0t!
    4. Re:Blame the market bulls ... by femtobyte · · Score: 4, Interesting

      The catch is "worth more alive than dead" --- the investment class making the decisions only cares about the fraction of worth *to them,* not to the economy and all stakeholders as a whole. Thus a company that is doing perfectly well --- able to maintain high employee pay, solid pensions and benefits, and still turn a profit for the investors --- will get killed if it will funnel more money into the pockets of the rich (even if the total economic value to everyone is lost).

      For example: if a currently profitable company has a big pension fund saved up to pay out to retirees, corporate raiders will load the company up with debt, funneling all its money to "contractors" and "consultants" until they are "forced" to dip into the pension funds to keep the company afloat. When all the assets are gone, tell the workers and retirees "sorry, we're bankrupt!" before cruising away on your new yacht.

      Killing thriving companies is also useful for breaking unions --- one profitable, strongly unionized corporation in an industry will drive up wages and benefits even for non-union competitors (by competing for skilled workers). Thus, the investing class will want to drive the unionized company into the ground --- at least long enough to win major concessions, if not outright dissolution, from the workers. Then it's profit for everyone else at the top.

      Killing off a thriving corporation may also be cheaper/easier than integrating it through merger/acquisition when a bigger corporation wants to buy off a competitor to assume a more solid monopoly position.

      In all these cases, "worth" to the economy as a whole is destroyed if all stakeholders are counted (especially employees and customers) --- but so long as more money ends up in the pockets of the super-rich, it's a "win" for the decision-makers.

  2. B&N Also need to get "with the times" by inflex · · Score: 5, Interesting

    If B&N want to improve their chances of success in the online/eBook market, they really need to sort out their PubIt side of matters. Currently unless you're in the US, or have gone through the extensive red-tape to obtain a US business cred, you are not permitted to get on board with directly publishing via PubIt. Conversely, Amazon and Kobo both allow international publishers to work directly through them.

    While small publishers outside of the "Big 6" don't contribute a lot financially, as individuals there are however many many thousands of us, and a lot of our potential readers do have Nook units.

    TLDR; B&N (PubIt) needs to be open for international publishers.

  3. Re:Is it really news for nerds or stuff that matte by timeOday · · Score: 5, Interesting

    B&N is a company that valiantly strived to make the transition from bricks-and-mortar to the Internet, just as we are constantly chiding outmoded companies like Kodak for failing to do (or the RIAA for actively fighting, when it comes to music). By releasing the Nook line of e-readers, B&N took a leap into leading the transition of print publication away from paper. I for one bought a Nook for my daughter a couple years ago, and she reads on it all the time. Yet still they are gradually falling by the wayside, like all the other big booksellers that pre-date the Internet. For all we blame top management for failing to make the transition, re-inventing a running company seems to be all but impossible.

  4. Expect a much smaller B&N by erice · · Score: 4, Interesting

    One of the news bits omitted from TFAs but included in the BBC article is this:
    The firm plans to shut a third of its stores by the end of the year.

    and

    Barnes & Noble was originally a New York bookstore, which Mr Riggio bought out the branding rights to in the 1970s, before building out a successful US-wide chain.

    Keeping a giant money losing company going would seem to be hopeless. I would expect that Riggio would reduce B&N's presence to only a few stores that he is sure can survive. Essentially save the company he started by sacrificing the behemoth that it has become.

  5. Re:I don't understand by fast+turtle · · Score: 3, Insightful

    Nobody caught this but what I see is he's simply doing a land grab. All of the real property (stores and such) is worth quite a bit of money and he wants it all for pennies on the dollar. If he's successful, those physical locations can then be sold off for 10-100x what he paid out to take the company private. Very nice profit for him.

    --
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  6. Interest rates are too low. by Animats · · Score: 3, Insightful

    What fuels "going private" are two things - low interest rates, and that interest paid by companies is deductible. "Going private" really means "leveraged buyout".

    Companies can pay for their capital through dividends to stockholders through stock buybacks which push up the stock price (or compensate for dilution through stock options), or by paying interest. Only the first is taxable.

    Tax policy and "quantitative easing" (i.e. central banks lending money at very low rates) fuel leveraged buyouts. Without those factors, "going private" would be a very rare event.

  7. Re:I don't understand by Trepidity · · Score: 3, Interesting

    That's actually the only reason we got some of my elderly relatives a Nook rather than a Kindle. Their eyesight isn't very good, and ebook readers are a nice way of reading reading books with zoomable text, with much better selection than traditionally available in large-print dead-tree books. But they aren't very skilled with technology either, so feel much more comfortable having a local store they can go to to buy the books, where someone loads them onto the device, rather than having to DIY it over the internet.

    If the Nooks don't continue to be connected to the brick-and-mortar stores, it loses that advantage. Perhaps it's too niche to matter, though. Alternately, perhaps they'll keep up some kind of cross-service agreement even if the company is split.

    --
    10 PRINT CHR$(205.5+RND(1)); : GOTO 10