Publisher Barnes & Noble, which traces its book publishing roots to 1873, is for sale, after stockholders watched the company's stock price dwindle due to increased competition -- not only from rival booksellers and device makers Amazon and Apple, but from every other activity in the world besides reading long-form text.
Stockholders pressured Barnes & Noble to examine all options, including the sale of the company to the highest bidder -- another in a series of ways in which new technologies have disrupted the traditional means of distributing and consuming information.
"Barnes & Noble, the world's largest bookseller, today announced that its Board of Directors intends to evaluate strategic alternatives, including a possible sale of the company, in order to increase stockholder value," reads Wednesday's announcement. "The Board came to this decision based on the price of Barnes & Noble shares in the marketplace, which the Board believes are now significantly undervalued."
This venerable bookseller, which lost lots of ground to Amazon due to its higher pricing and now finds its Nook device threatened not only by Amazon's Kindle but by Apple's iPad, may not be valued by the stock market, but the company's board of directors remains optimistic.
"As the world’s largest bookseller, 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," maintained the board of directors. "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."
Leonard Riggio, the company's largest current investor who acquired it outright in 1971, approved of the board's decision in a statement.
"I fully support the Board’s decision to evaluate strategic alternatives at this time," he said. "Regardless of whether I participate in an investment group that buys the company, I, as well as the entire senior management team, am willing and eager to remain with the company and see it through the challenging years ahead."
Another large investor in the company, Ronald Burkle, with just over 19 percent of stock according to the Wall Street Journal, is leading the charge against Riggio and could even attempt to oust him from the board at the next vote. That report lists Burkle as a potential buyer of the company, as well as private equity groups.
So, what went wrong? Why does Wall Street feel so dismal about Barnes & Nobles' prospects?
Aside from its high prices and late entry into the eBook reader market, Barnes & Noble, which has hundreds of brick-and-mortar retail locations across the country, faces upcoming competition from Google's impending eBook store, new competition from Apple iBooks, and old competition in the form of Amazon and even Borders, which entered the eBook market earlier this year.
However, there is one thing about Barnes & Noble that Wall Street appears to like. The company's stock price reversed its decline on the news, increasing over 19 percent in after hours trading.
Image courtesy of Google Finance
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