Barnesandnoble.com, Inc. Nasdaq: BNBN Branch: Etailers & online markets

Profile:
Barnes and Noble (BKS) is the largest traditional bookstore chain in the US. This has the advantage that almost everybody in the US knows this chain of stores. The main reason for Barnes and Noble to go selling online was the enormous success of Amazon (who is gaining marketshare). Barnes and Noble founded an independent online store with the same brand name. This online store also competes with the classical store but it's the only way to do it right. The larger part of the shares of the online bookstore (BNBN) is owned by its mother (BKS) and the German company Bertelsmann.
The total revenue of the new bookstore is still in no way a threat for Amazon, who's selling a lot more than books these days.

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 Management:
Leonard S. Riggio is the man in charge. Should you put a man in charge who dropped out of NY University? We will see. One of his hobbies is collecting wine. Didn't anyone tell Leonard that he should drink the wine?

Started: since March 1997 online sales
IPO: 25 May 1999

BN.com on the Web:
main page: http://www.bn.com
current stock price: click here
investor relations: n/a

 

Cool !

Not so cool...
  • Great Brandname
  • Knows (or should know) their market with decades of experience in selling books
  • Can have economy of scale if BNBN buys the books with BKS
  • BNBN competes with its own mother, and BKS is also a wholesale; what will the independent shopkeepers say?
  • Margins are minimal on books
  • Local competition is hard to fight

 

Main competitor:

Propus personal view:
The biggest advantage of Barnes and Noble (BNBN) is their enormous rich founders: the mother company BKS and the very wealthy German publishing house Bertelsmann. The margins on books are still minimal and it's still very hard to make any profit, look at Amazon with sales into 9 figures. We don't know if Barnes and Noble is going the right direction with the company. Amazon is expanding into a sort of WalMart. We don't think the shareholders of Barnes and Noble want that, but it's the only way to cash in to the customer database. And what if online sales is a success; will those same shareholders let their own companies soar under the success of BNBN?