I agree that the traditional bookstores are going the way of the Doe Doe Bird.
I see the future bookstores in malls reduced in size by 50% to 10,000 sf. I also agree that there is too much saturation in markets with B&N and Borders, so one will have to go. That's a lot of GLA that mall operators will have to renovate and re-lease. On the otherhand, one operator in those markets, with significantly reduced occupancy costs will probably make a good business plan.
Ack's way out of Borders could very well be to get control of B&N and then put Borders into BK. In BK, he can cancel the leases he does not want and then merge the good parts of Borders with B&N. A merger of the good part of Borders with B&N and then a significant skinnying down of the new merged company could result in a nifty result for Ack.
Interesting thought, Hawk. Yet, Ack would have to overcome the potential large loss on his Borders stake (if filing for BK) by a very increase in his value on the B & N holding. I'm not sure how or if his numbers would work on that.