Thursday, March 20, 2008

Will Borders Survive 2008?

Things have not gone very well for Borders Group for a while now and with today's announcement that the corporation is considering putting part, or all, of itself up for sale one has to wonder how much longer the Borders bookstores will be open for business. Will they combine with Barnes & Noble, resulting in fewer locations and fewer choices? Will they sell off only their international operations? Will this turn out to be the bad news for readers that it appears to be?

Business Week talks about today's developments in an article cleverly titled "Borders' Big Markdown."
Struggling bookstore chain Borders (BGP) may put itself up for sale, giving rival Barnes & Noble (BKS) a chance to buy its main bricks-and-mortar competitor.

Borders executives, one year into a plan to turn around the bookseller, revealed on Mar. 20 they were considering selling all or part of the company only after being hit hard by the tough retail environment and the difficult credit markets.

Running out of cash, Borders says it secured expensive financing from Pershing Square Capital Management, a major shareholder. It also suspended its dividend and reported mediocre quarterly earnings on Mar. 20, the same day Barnes & Noble also posted results.
According to the article, Borders is having extreme cash flow problems and I see that its stock is selling today for something under $5 a share. If I were more of a gambler, I would be tempted to buy a few thousand shares at that price. I wonder if Barnes & Noble sees Borders as a marked down bargain right now...or if it is afraid to spend on an acquisition when faced with so much competition and heat from Amazon. I find all of this to be interesting...but more than a little sad.


  1. Wow, that's such a shame. I knew many used bookstores were struggling- quite a few I used to frequent in different parts of the country have closed- but I had no idea a giant like Borders was having difficulties as well. I would be very sad to see the Borders in my hometown disappear.

  2. Jeane, I think what is likely to happen with any kind of merger with Barnes & Noble is that some of the stores in the new group would be shut, some people might find the nearest big bookstore farther away from them than before. But a sale of Borders wouldn't necessarily mean that your particular store would close up shop.

  3. With all the consolidations, the death of the midlist, the fact that getting a mainstream publishing contract is no longer even a guarantee of getting your book shelved at the local Borders or B&N, and the fact that indie authors earn 3x the author royalty (or more!) of their mainstream counterparts, I've elected to leave my agent and go indie.

    The only carrots big publishers have had to dangle in front of writers are marketing/promo muscle and brick-and-mortar bookstore presence. Nowadays, only bestselling and celebrity authors get any of the first, and increasingly, they're the only ones to get the latter as well.

    When I walk into my local Borders, it seems books are the least of their offerings. They've got CDs, DVDs, stationery, toys, iPod accessories, and now even cosmetics! This is precisely why it's getting harder and harder to get your book onto their shelves. Too many times, I've gone into Borders looking for a specific, current book and not found it. Now I only go there if I'm looking for a current NYT bestseller or a magazine, or to browse the bargain book tables. This perspective as a reader has definitely impacted my perspective as an author.

    Thank the powers that be for Amazon, is what I say. I think the only brick-and-mortar bookstores with a lasting future in N. America are independent and niche bookstores. Everyone will go to Amazon for mainstream books, but head to their local indie bookseller for their used, out-of-print, first-edition, local-interest, etc. books.
    April Hamilton, IndieAuthor

  4. What you say makes perfect sense, April. On the one hand, I would hate to see the death of all big box stores in my area because I can lose myself for hours at a time in them. But, if on the other hand, their demise will ensure the continuation of indie stores and publishers, it's probably a trade-off that I would be willing to make.

    Things have certainly changed in publishing to an extent that I never believed I would live to see. Writers seem to be calling their own shots to a large degree these days, and THAT has to be a good thing for writers and readers alike.