Barnes & Noble, Inc. (BKS)

lquadland10 (57.45) Submitted: 1/07/08 6:32 PM

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I see the trend you are talking about. Not as bad as you talk about because they have the online sales also. This being said I think this will be ok until the end of Jan. when the company insiders will sell high and then exercise the stock options of selling oct buy and then buying the next options for april. If you look at the insider buying and selling you will see a cycle that most of all the big wigs do. The exception is the stock options they give to the accounting firm. I may be wrong but this is my observation on the finances stated in the yahoo stock insider trend. ROCK ON> Lynda

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kristm (99.86) Submitted: 1/10/08 11:16 PM

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They're building a new 30,000 SQF store inside a mall in Chattanooga, TN. which will have the company's largest Starbucks inside it. Also promises to have a children's section larger than most B&N stores. I'm failing to understand how they're going to make money from it.

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TMFBreakerDave (99.21) Submitted: 1/11/08 12:17 AM

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Well the stock sold off 19% today, so I don't know about being able to sell high at the end of Jan..... --D

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AresFinancial (99.14) Submitted: 1/11/08 5:53 PM

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Good reply. I think these book stores are planning on past performance = future performance? Or they are to far along to change plans. But there is an ABSOLUTE oversupply of retailers, especially book stores and I think they will have hard time in the future.

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AresFinancial (99.14) Submitted: 1/11/08 10:17 PM

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TMFBreakerDave,

I think some BIG institutions are following my picks? I said there was going to be a recession back in Oct 07. Now GS, MER etc thinks their will be a recession? I wrote about the underperform about BKS and it fell 19% in a day! I did not even have time to get short BKS before the sell off.... I am getting scared about my calls? I need to just think happy thoughts, just happy thoughts, no negative comments, nothing negative, just positive.... FOOL POSITIVE!

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AresFinancial (99.14) Submitted: 1/28/08 11:46 AM

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FYI - Steve Jobs thinks “It doesn’t matter how good or bad the product is; the fact is that people don’t read anymore,” he said. “Forty percent of the people in the U.S. read one book or less last year.”

http://www.nytimes.com/2008/01/27/business/27digi.html?_r=1&ref=business&oref=slogin

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simon78 (55.86) Submitted: 3/12/08 11:06 PM

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Interesting post. Thanks.

I disagree on some of the points. I agree on the recession, discretionary spending, substitution to AMZN.

Lack of reading of books is unlikely to be a big deal for the stock. I think you're correct, but this isn't a change. People purchased book and didn't read them in the past, this will continue. The point is the purchase occurs. For example gyms continue to flourish, though people don't use their membership based on the same logic you describe.

Books are moving online, but unlike videos/music, books aren't electronic media yet. This will change, but the experience of reading an electronic book is imperfect. The change will be slow than for audio visual entertainment. You can't read an electronic book in the bath, for example (yet).

Bear in mind the Barnes and Noble experience, it is still a nice place to shop and you get the book instantly. So it's not just about price and selection for some customer segments.

You shouldn't ignore valuation. The stock generates $200 million of free cashflow and is trading at less than 10x free cashflow. You need some very strong arguments to overcome a valuation that compelling. I purchased BKS this week for that reason, it's not a rockstar company, but it offers remarkable value right now.

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AresFinancial (99.14) Submitted: 3/13/08 11:53 PM

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Rec for you, decent thought out reply. Even if you are wrong....

"Lack of reading of books is unlikely to be a big deal for the stock."
They also sell CDs, unlike the other CD sellers that went out of business.Really? What will they sell to pay the rent? What will be the "E" of the P/E? Friendship? They are not the public library, they have expenses....

People pay $50++++ per month in CONTRACTS to JOIN a gym. You PAY NOTHING to sleep, use the bathroom, flip through magazines in BKS.

"electronic book is imperfect", so is trying to find a book in a book store. Or find a movie at BlockBuster... wait they are going out of business...just like BKS?

"Bear in mind the Barnes and Noble experience"
Experience does NOT and will NOT pay the rent. BKS is not the Public library or a museum.

"You shouldn't ignore valuation."
I am not. But I do not believe it will hold its valuation anymore then a house in Vegas or a fiat currency in a nation at war.

"The stock generates $200 million of free cashflow and is trading at less than 10x free cash flow."
It DID and homebuilders were 80% higher in 2006 then they are now and their free cash flow is NOW MINUS millions.

"it's not a rockstar company"
Actually, it is exactly like a rockstar. They are good for one or two albums before it is over.

FYI - I looked at your portfolio. I would almost take the opposite side of everyone of your positions. There is not a stock in your portfolio that would not make a decent short cannidate. Check back in a couple of months and we will see.

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smhikida (91.36) Submitted: 3/25/08 12:26 PM

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A couple notes...

Though the overall populations is reading less, those who do read are very loyal to purchasing books, browsing, etc. Most will avoid the ebook idea (which flopped 5-7 years ago).

I'm not sure about the rest of the country, but many schools have required reading where students (or more likely, the parents) must purchase the books from a bookstore. 80% of the time, the students don't try to purchase until the night before, which doesn't work for Amazon or any other .com.

I'm a geek and love books. Unfortunately, I suspect that BKS will struggle and never really do better due to the high overhead costs (lease, payroll, transport/shipping) and the shrinking demand.

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BookStoreAintcha (< 20) Submitted: 8/27/08 3:13 AM

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Rebuttal:
1. Never happen. You can't carry an E-Book everywhere. Bathtub, poolside, sandy beach, etc. Music can be a background activity, where as reading requires attentive concentration (even at minute levels). So ITunes is not a true comparison.
2. It will if you take 80 cents worth of ingredients and coffee beans and charge 5 bucks for a coffee and scone.
3. Public libraries can be one of the best ways to SELL books. Authors, donate a copy of your newest book to your libraries...great advertising. There will always be some who want a copy of thier own to enjoy with no time limits. And no wiating lists.
4. As long as they are "purchased'....that's the argument here. Stocks are determined by the sale...not the reading of books.
5. Next step...smaller markets! Cities and towns where customers can only shop for books at Walmarts and other such stores. These are great places to get the newest and hottest titles...but not the unique titles or older ones.And for ever new book an author releases, he/she has dozens of older ones still in print. These supermarket competitions can't devote the space to everything and still have room for the produce. Saturated? No!
6. Every recession ends eventually. Until then, we need cheaper forms of escape. Books are a way. Cheaper than flying and driving. Cheaper than a family trip to Adventure Land. Cheaper than the movies. Cheaper than cable tv.
7. See point six. And a book is an investment that doesn't involve a two year contract or an upgrade in service.
8. NOTHING is free.
9. Amazon worries whenever someone uses the name "Barnes & Noble." B&N sucessfully conquered the virtual world AND the building down the street.
10) See item One. (It's hard to grab a download on the whim when passing through an airport. Cant pull out a laptop just anywhere to read. Don't need an external device to read a paperback.
Be honest, you wish you were my kid. I buy them books. Key word is "BUY."

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AresFinancial (99.14) Submitted: 8/30/08 3:17 PM

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"1. Never happen. You can't carry an E-Book everywhere."

Actually, you can carry several hundred books in the palm of your hands.

"Bathtub, poolside, sandy beach, etc."
Why not? No doubt books are not going away, completely. Just like some DJs still spin records. There is still Big band ballroom dancing too. Not sure where?

"2. It will if you take 80 cents worth of ingredients and coffee beans and charge 5 bucks for a coffee and scone."

It won't pay for 20-30k square feet of a retail store. ie $20-50k in monthly rent. Hence, the reason Starbucks closed 600 stores.

"3. Public libraries can be one of the best ways to SELL books. Authors, donate a copy of your newest book to your libraries...great advertising. There will always be some who want a copy of thier own to enjoy with no time limits. And no wiating lists."

Yep, it sucks when you competition is on the government dole and provides what you do free of charge.

"4. As long as they are "purchased'....that's the argument here. Stocks are determined by the sale...not the reading of books."

The US is running out of credit, unemployment is coming and frugal is the new cool!

"5. Next step...smaller markets! Cities and towns where customers can only shop for books at Walmarts and other such stores. These are great places to get the newest and hottest titles...but not the unique titles or older ones.And for ever new book an author releases, he/she has dozens of older ones still in print. These supermarket competitions can't devote the space to everything and still have room for the produce. Saturated? No!"

lol, one word: Amazon.com

"6. Every recession ends eventually. "
This is more severe then a "recession". This a $6-10 trillion contraction in wealth.

"Until then, we need cheaper forms of escape."

That is why we are using the internet, right now. Right? And the library is still free.

"8. NOTHING is free."
Time is money, time keeps ticking, ticking, ticking. But you just wrote me, I just shared my wisdom with you, what did that "cost"?

"9. Amazon worries whenever someone uses the name "Barnes & Noble." B&N sucessfully conquered the virtual world AND the building down the street."

Not sure what you mean?

"10) See item One. (It's hard to grab a download on the whim when passing through an airport. Cant pull out a laptop just anywhere to read. Don't need an external device to read a paperback."
An Iphone and others can hold several hundred books, that I can load for FREE. The

"Be honest, you wish you were my kid. I buy them books. Key word is "BUY.""
As long as you stay employed, I would like to be your "kid". But the new cool is "frugal", which requires saving.

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