From MSN Money:
Barnes & Noble is getting a lot of attention these days, particularly for a stock whose market capitalization now languishes below the $1 billion mark and is worth less than Noodles & Co., the fledgling fast-food franchise that went public only months ago.
There are some good reasons for that attention. First, and most significantly, are the company’s financial results. It’s bad enough that Barnes & Noble reported a wider fiscal first-quarter loss than anticipated, of $87 million or $1.56 a share, double the loss announced in the same quarter a year ago.
Worse, the company is still struggling to compete in the digital age. Its management remains committed to selling the Nook e-reader/tablet devices in order to keep selling digital content — books, magazines and a host of other features — that likely is more profitable than printed matter. (Barnes & Noble doesn’t break out the profitability of the Nook hardware business or that of sales of digital content, but some analysts calculate margins on the latter could be as high as 50%.)
More at the link.
Your Editor is an avid reader, and loves books; there are books all over his humble abode. But there are also Kindles in our house: my wife has a Kindle Fire, and both of our daughters have standard Kindles, while I have an Acer Tablet with a Kindle function. They are all on the same account, so when any of us buys a Kindle book, it will download to everybody’s reader.
It’s a matter of convenience: if there’s a book I want to read, I can go online, either through my desktop or on my Tablet, order the book, and it’s electronically delivered in just a few seconds. Because there is no paper or printing cost, Kindle books are less expensive in themselves, and there is no time of gasoline spent driving to the Barnes & Noble store in the Lehigh Valley Mall, 25 miles away. As far as green technology is concerned, while there’s some expense for charging the Kindles and tablet, there is no gasoline burned, no wear and tear on the vehicle, no trees cut down, just none of the costs associated with printing books.
Barnes & Noble foresaw this, and created their Nook tablet reader. However, in their attempt to keep their brick-and-mortar stores in business, their Nook is locked into buying content from publishers through Barnes & Noble. With Borders having already failed, and B&N looking like it could be on the ropes, what happens to Nook owners and the utility of their devices if the company folds?
For whatever reasons potential consumers have had, Nook sales have declined dramatically.
For a reader, there’s something comforting about a Barnes & Noble store: you can go in, take as much time as you want browsing, and even take a book off the shelf, sit down in a comfortable chair, and read it there, without buying it. But part of the trouble for B&N is that I can do that, get interested in a book, and then buy it for less money — sometimes far less money — from Amazon into my Kindle. I am not poor, and I have been known to just plain waste money, but I can be sensible about my spending as well.
I’ve noted before that I like physical, printed newspapers, but that the only newspaper to which I subscribe is The Wall Street Journal, in digital format. I am able to get the news I want, up to the minute, without killing any trees, without getting newsprint on my fingers, and without having any trash to throw away. While books don’t get thrown away in our house, they do take up space, and Kindle books reduce the clutter. What I like, in a comfort sense, has a downside, one which is being addressed by modern technology, and it’s getting difficult for me to see Barnes & Noble, or any company which relies on the print medium, as having much of a profitable future in the longer term. Investors might be able to make some money, short term, in such stocks, but I would never recommend considering them as long term investments.