In anther story, somebody mentioned that Borders was a potential buyer, this is not possible since it would effectively eliminate all competition in many markets for purchasing books in a retail store. It wouldn't pass FTC regulators.
I know shareholders must be frustrated with the less than stellar performance (1/3 the price as March 2006), but going to a private company may help or hurt the company in the long run.
Barnes & Noble has been under attack from Amazon for years whether it be the physical bookstore retail model, e-commerce or e-books and e-readers. Now the company is evaluating “strategic alternatives” including a possible sale.
In a statement, Barnes & Noble said its decision to evaluate a possible sale is because the company’s shares are “significantly undervalued.” Meanwhile, Leonard Riggio, Barnes & Noble’s founder, is considering teaming up with investors to acquire the company.
The company said:
Barnes & Noble has an iconic brand and unique competitive advantages we believe will position the company to succeed over time in a rapidly changing market. The Board is confident in Barnes & Noble’s strategy and fully supportive of the senior management team, which is delivering explosive growth in our fast-developing digital business. The Board has concluded that a review of strategic alternatives is the appropriate next step to take full advantage of our compelling digital opportunities and to create value for shareholders, customers, and employees
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In the short-term, the Barnes & Noble news certainly boosted shares, up roughly 25 percent to $16.04 afterhours.
In the long run, it remains to be seen whether a Barnes & Noble sale or effort to take it private will bolster its efforts against Amazon. The e-reader stakes are getting higher and perhaps Barnes & Noble’s management will have an easier time making big bets without quarterly scrutiny. At the very least, Barnes & Noble’s statement indicates that it thinks it deserves more credit than it is getting.
