It’s now final that B&N is going to be sold. The share price is ‘significantly undervalues’, and the company had poor earnings last quarter. The WSJ reports:
Barnes & Noble Inc., put itself up for sale Tuesday, succumbing to pressure from shareholder activists as digital books erode the traditional business of the nation’s largest bookstore chain. The New York-based company said a falling stock prompted its board to consider all “strategic alternatives, including a possible sale.”
The daily Finance reports that
there are several compelling reasons why Barnes & Noble would pursue this particular course of action. There’s the growing e-book business that isn’t moving fast enough for shareholders but would be attractive for private equity. There’s the market capitalization that just keeps dropping (it was $750 million in July, now it’s just over $700 million, and Riggio’s own stake is now a lot less than the $450 million he paid to buy Barnes & Noble’s College division on behalf of the company). And the third and thorniest reason: a man named Ron Burkle.
Now Mike Cane of iPadTest suggests why Amazon should buy B&N. He mentions 15 points in his writing. You may or may not agree with him on all points, but he is the only person who digs the matter comprehensively. I’m not quite sure how far Amazon’s move to buy B&N will help Amazon financially since such brick-and-mortar book chain-stores are losing importance, and Amazon has no experience in running such stores. However, I can’t resists myself to copy & paste all the points Mike made in his write-up :
1) If this doesn’t make sense, consider FedEx buying Kinko’s. This merger would be far less strange.
2) Amazon would gain a huge book-related retail presence for the Kindle.
3) Amazon could swiftly put ePub to death in one shot and transition all Nook buyers to Kindle format — without requiring eBook re-purchasing.
4) Amazon would have the major presence in book buying and force the industry into the twenty-first century.
5) Amazon could install POD machines. Barnes & Noble could finally offer what Amazon always has: every book in print, in-store. POD machines would mean cutting back on inventory by forcing publishers to eBooks and POD. (Publishers would come to favor that: finally, a business with no returns.)
6) Those who live near a Barnes & Noble could pick up shipments there, instead of waiting for FedEx or UPS to arrive and without the fear of waiting packages being damaged or stolen.
7) Amazon is known for pleasing customers — Barnes & Noble, not really.
Amazon is a retail business anyway — albeit entirely online — and could use the extra real estate freed up by fewer print books to showcase items people can’t sample online. For example, how much would Kindle DX sales increase with people being able to actually hold it and try it without obligation?
9) Amazon has the cash to do this in one swoop.
10) A disorderly collapse of bookselling is not in Amazon’s best interests. Borders is already in trouble and publishers must be wondering what unpaid bills they’ll get stiffed with by that company.
11) If, as Bezos stated on Charlie Rose, the Kindle is all about reading, this is the chance to show that in a big way.
12) Any other buyer — including taking Barnes & Noble private — would be worse. One eBook file standard needs to prevail outright for the good of both publishers and readers.
13) The Amazon Store as a name has better brand recognition. Worldwide. They’d become tourist stops, like the Apple Store. Per-square-foot traffic and revenue would skyrocket.
14) Amazon merch. How many tourists will leave with a T-shirt? A hat? A carrying bag? A Kindle case?
15) As I’ve waited to hit Publish, people on Twitter have objected to the idea based on Amazon having a retail presence invoking sales taxes. With every state being in financial distress — and the federal government too — taxes are going to happen anyway. The Internet does not exist above or separately from the countries its companies operate in (ask any of them how many subpoenas they get each day — and from whom). And Amazon, then being “caught” in the tax trap with a brick and mortar presence, can go on to argue to close that loophole for all others too. Because that’s how business operates.
Don’t wait, Bezos. Pounce!
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