Has anybody given thought to why B&N teamed with
Bertelsman? Yes, they got 200 million but they gave up 41% of
BNBN! Consider that the IPO was offered at 18 and the
total $$$ the offering brought in was about $450
million of which B&N received half after broker fees. I
don't have all the details but from where I sit, it
looks like another f--- up by our senior management
folks at B&N.
First, B&N does not have $600 million in cash.
The Ingram deal was for $200 million in cash and $400
million in BKS stock. Given the company's balance sheet
(latest 10-K), it seems clear to me that they were going
to borrow the $200 million.
company's book value only matters if you're going to
liquidate it. You aren't going to liquidate it. If you're
buying the business instead of buying inventories and
real estate, then present and future cash flows are
the measure of the company.
The problem is:
BARNES AND NOBLE'S SALES GROWTH HAS BEEN DECLINING YEAR
OVER YEAR. So unless they reverse this, future cash
flows don't look good, so the stock price will remain
depressed. You really don't need any more analysis than
this, if you're a long term investor. They have to
solve this problem.
Forget book value. For
growth stocks, it isn't a useful valuation tool unless
the company is going bankrupt. If the company is
going bankrupt, book value is only interesting to the
creditors; equity holders are going to take it in the
The reason to own this company is that it is doing
the right things to improve the things they CAN
improve. B&N is closing underperforming stores and putting
capital into the opening the outperforming superstores.
They will improve their margins this way. If B&N can
make their numbers this year and thereby convince the
world that Amazon doesn't have them by the short hairs,
then long-term shareholders will make some money.
Short-term traders will continue to do what they usually
do... badly underperform the market.