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Barnes & Noble, Inc. Message Board

  • chrishasty_1982 chrishasty_1982 Jul 1, 2010 11:17 AM Flag

    Seasonal profits.

    To all the people shorting the stock. It's gonna be obvious that a Christmas tree company is gonna look like a disaster in July. Same story here. Don't ignore that revenues from eReader's is deferred over a 2 year period. Too many people are saying "the sky is falling" on good companies with lots of customer loyalty. At these prices this is an excellent buy opportunity.

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    • Would elimination of the Riggio brothers from BKS help save the company, make it worse, or remain unchanged?

      In my humble opinion there's very little upward mobility in this company thus "new" ideas are hard to implement. Many of these "new" ideas need an avenue to get implemented in order for BKS to innovate. Is there such an avenue in other companies that BKS could build upon?

    • WRONG!!!

      You might think so, but perhaps the biggest concern is the Riggio family- The founders of BKS and holders of up to 37% of shares.

      The Riggios and their board, have demonstrated that they will prevent anyone from gaining more than 19% of shares- "if not approved". Even though it means depressing share prices further.

      RONALD W BURKLE would like to purchase shares on the open market - He is willing to pay a premium - he would likely move to replace BOD members and make changes that would be positive for shareholder value...

      The Board has implemented a poison pill (AKA share holders rights) IN RESPONSE TO RONALD W BURKLE and his attempts to own more than 19% of shares.

      The rule was supposed to be across the board - if anyone attempts to own 20% or more of shares- all share holders (other than the entity offering to buy shares) have the right to purchase shares 1/2 price.

      The board has made exceptions to the poison pill for Riggio family members though.

      The Board also decided to buy from Mr. Riggio, Barnes & Noble College Booksellers, which was a stand alone operation - umm can anyone smell conflict of interest?

      There is a growing opinion that BKS is headed for BK. It is in some persons "top 20" of all retail stores considered at risk for failing- not just specialty retail.

      IS THERE some information that would indicate BKS will be at better profit margins soon?

      Because they could do 10 Billion in sales and still be in trouble if the gross margin and bottom line don't have some miraculous improvements... They are forecasting a dip in all profit margins-

      Some say "B&N has lots of liquidity." Sorry I need to disagree. Again, the short ratio is .25 that's the measure of liquid funds vs near term obligations -
      This means that their near term payments are 4 times the amount of cash and other liquid assets!! That is not "Liquidity"

      The Current Ratio is just 1.0 - that mean there JUST enough ability to meet current payments-

      If they pay the dividend for any longer - particularly with the money being spent on the increased sales push - the only place the money can come from is borrowing of some nature-

      There actually may be some more borrowing for the divy, but stock holders would not be getting a true/typical dividend- which is a percent of bottom earnings -

      Share holders would be getting paid by decreasing the value of the company- because earnings are not going to be anywhere near the $1.00 mark - It's sort of like a reverse mortgage- It decreases the value of the underlying asset.

      And PLEASE, don't Mistake the book value for the break-up value. Book value is somewhere under $1B - That's with all tangibles and non tangibles -

      What could actually be realized in a break-up depends in part, on how depreciation and non tangibles have been accounted for in years past... The valuations may be in question.

      Game stop was discarded and though is having trouble recently (probably due in part to a Riggio on the board)- It has been a huge success compared to BKS- with a market cap near 3B and better numbers, a recent split (2007) and subsequent rise to over highs 60...

      So though BURKLE may not be your favorite person, he has made a living at taking very distressed businesses and turning them around...

      Short of that a spin-off could be the best way to unlock value. The Riggios will not allow any takeover that does not present them with better value than the general share holders would receive.


    • Instead of bankruptcy with regard to BGP, the increasing competition will lead to consolidation, which makes it an attractive takeover target at current price levels.

    • Wait, I was actually conservative in what I stated. Sales for FY 2010 were 5.8 Billion and guidance is for 20-25% sales growth for FY 2011 (current year), so that would put 7 Billion in sales on the low end of the estimate for this year.

      Some qualitative factors

      NOOK has better in-store expsure to dedicated readers being sold in BN stores and in Best Buy.

      NOOK has better entry price point than kindle at 149$ for the wi-fi, and both wi-fi and 3G versions have touch screen navigation as apposed to a key-pad.

      All the sales garnered from customers who bough a NOOK are likely to take customers from because you are required to set up an account on for your NOOK downloads (where they now retail new and used on par with amazon, who doesn't have a virtual monopoly on online book sales now)

      B&N is in substantially better financial condition than it's comparable brick-and-mortar rivals (i.e. Borders), so it's possible one of their major competitors could fold.

      Dividend is not set in stone, but I don't feel it's in jeopardy becuase the short term push for e-books will not be a constant expense going foreward and B&N has lots of liquidity.

      Any way you look at it, there isn't a risk for Barnes and Noble as a going concern from a financial standpoint, and they are the #1 book retailer with nothing to fear from brick-and-mortar competition and nowhere to go but up with regard to online sales.

      I hate to say it, but if you only concentrate on statistical approaches to stocks you will float along with the rest of the guys running spreadsheet screens.

      Hell of a contrarian play on a well loved set of stores with no prospect of a total loss. You can't be scared :D

    • Chris: Not to burst your bubble, but BKS has lost a great deal of loyal customers. Including me.

      Do some research about the customer service this company has been providing lately. It has been steadily degrading for a number of years now.

      • 1 Reply to merklin18
      • I have had no customer service problems. You can't please everyone though.

        My feeling is this, even after substantial expenses to make a big push for growth in the first segment of the industry to offer growth in a long time, management estimates it will essentially break even this year (and they are usually conservative looking forward)

        Next year revenues of 6.7 Billion are expected. Online sales will offer better margins, so even if they only brought the aggregate profit margin from all 3 segments (Retail, College, and online) back to pre-recession levels of about 2.9% Earnings would be about 3.47 per-share. Even with a conservative P/E ratio of 16 that would put the share price at over 55$ that isn't even mentioning dividend income that is currently yielding over 7%.

    • Well, not yet -

      There is an intra-day reversal happening at the moment but...
      there has been one almost everyday during this trend.

      The prices need to stabilize for at least 2-3 days and OBV needs to go positive.

      That could signal a reversal from the present trend.

      We are not at that point yet.


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