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Barnes & Noble, Inc. Message Board

  • emilylane1980 emilylane1980 Jan 6, 2011 10:25 AM Flag

    Earning will beat 35-40%, see detail information

    Last Year EPS $1.38.
    Coming Quarter Estimated EPS $1.08

    8% increase year over year, meaning EPS will be at least $1.49, this doesn't count the delayed sales due to the snow storm and Nook Color sold out during holiday season, there are back log orders and strong marketing reception across the country. In this estimation, BKS will beat 35-40% on projected EPS.

    Short interest is very high, most of them shorted around $18 - $20, this is why they are not covering their short because they are still making money, but as soon as company announce their earnings next Month, shorts will have to run for cover in the fear of more upside in the coming quarters.

    Not to speak if there is any news from Borders come out or new investors pump in cash. People like to jump on a good boat, big boys who ran from BKS will start to get cozy once they see the numbers about Nook, tablet is hot and Nook was considered as a mini tablet.

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    • Agreed! B&N stated in their announcement today that at least 20% of the online customers are new customers. Meaning they are getting customers from their competitors ( i.e. Amazon ), this is a big deal. No wonder AMZN droped $1.56 today.

    • No, earnings will actually be even lower because Nook is a loss leader. The more devices they sell, the more they lose. They need to make up for losses on device sales by selling more books whether paper or digital. But sales of books (paper+ebooks) had been declining fairly rapidly. And all indications thus far has been that book sales will continue to decline.

      Given the growth rates at retail (8.2%) and online (67%), total revenue (not including college) increased by about $175m. If they sold a million at an average of $200/unit, that would mean non-device sales declined by $25m. That means book sales declined even more than that since BKS has been offsetting book sales declines by adding other products like toys.

      Ultimately, BKS needs to sell more books to be successful. If they can't do that, they're doomed.

      • 3 Replies to netmargin15
      • Given the growth rates at retail (8.2%) and online (67%), total revenue (not including college) increased by about $175m. If they sold a million at an average of $200/unit, that would mean non-device sales declined by $25m. That means book sales declined even more than that since BKS has been offsetting book sales declines by adding other products like toys.
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        Good analysis, analysts are expecting an earnings decline of 19.8m, a sales decline of $25m would correspond to an earning decline of about 15m, assuming 60% margin, which is probably on the high end for BKS. BKS earnings would be below estimates if they are losing more than $5/ nook.

        But wait, last year's comps included sales of the original nook which sold out at $260 (lets call it 250 to make the math easy). If we estimate that there were 200,000 original nook sales at $250, then the actual increase in revenue from nook sales is only $150m, and non-nook sales have actually gone UP 25m.

        BKS earning would be below estimates only if they are losing more than $10/ nook.

        Of course, we also don't know the college bookseller results, or how much they saved from closing locations, or how much they are spending on R+D for the nook2 and nookkids launch (or for that matter, where they are sticking the R+D costs- my guess is that it's probably rolled into the BN.com expenses). Or if they are doing any writeoffs. So it's all a crapshoot.

        But, whether earnings are up or down in the short term, things are clearly going according to the management's plan. The P/E ratio will improve even if the E part doesn't.

      • "The NOOK is a loss leader" - You might want to recheck your facts.

      • I don't know where people get the idea that Nook has low margin, if you listen to their previous conference call, the cost of the nook is not high, all made in China like ipad. Of course, the R&N cost, but it is already priced in. Don't forget, the device looks fancy, but the material and labor are extremely cheap. $200 plus is a very high price tag, don't be fooled by the flashness of the device. The *beauty* of cheap Chinese labor and materials.

    • Very optimistic view. I think the rose-colored glasses will come off when earnings come out.

 
BKS
18.18+0.05(+0.28%)Apr 15 4:01 PMEDT

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