According to ConsumerAffairs.com:
Shares of Borders fell to below $1 after it announced that it couldn't afford to pay publishers for their books at this time and would have to delay payment.[...]
That news followed an earlier report in which Borders said a third party had lowered the value of its inventory in the event it had to sell the company or go out of business. That hurt Borders' ability to borrow and forced it into talks with senior credit facilities to refinance its debt.
Barnes and Noble, which even put itself up for sale, so far hasn't attracted any buyers other than possibly Borders. But then that would appear to be like the Hindenburg buying the Titanic.Read the whole article for an interesting take on the situation that both bookstore chains find themselves in today. It appears that both chains are going to have to start liquidating some real estate holdings and closing down stores because of the rate at which in-store sales continue to drop.
Meanwhile both Borders and Barnes and Noble are closing stores. Borders is scheduled to close its downtown Portland store on January 7. The rest of the chain could be right behind.
I can't bring myself to take this as lightly as the article's writer seems to take it in his closing comments:
Studies show people with e-readers are reading more than they did before. I know that's true among the people I know who have them, and they love their iPads, Kindles and Nooks. Still, it's a little sad to see bookstores close, even though I never go there anymore.Those of us who continue to believe that e-books are a poor substitute for the real thing are losing ground every day. We are going to have to adapt to the new reality of the world of book-selling whether we want to or not.
I guess I just like to see them there when I drove by.
(For those who might think I have my head in the sand when it comes to e-book readers, I will add that I have owned a Sony Reader for several years and that my iPad is loaded with software from Kindle, Nook, iBooks, and several other e-book publishers. 10 of the 125 books I read in 2010 were e-books and I do appreciate the convenience factor of reading that way - but e-books remain a poor substitute for reading from a physical book.)
Very simple: they would buy B&N in an overleveraged deal that would enrich the investment bankers with upfront fees, and default on the debt in two years. Never mind that they don't have enough cash flow right now to fund their operations, let alone pay the extra principal and interest on the buyout debt. But Wall Street will miraculously create projections that impossibly prove how the deal will work out. Even though it won't. I'd bet the merger happens, and will fail miserably.
ReplyDeleteMaybe they're hoping Washington will decide they are too big to fail....
ReplyDeleteThe thing is, what's happening with bookstores is also happening with just about every other type of store you can name. You can buy just about anything on-line and pay less for it than you would in an actual store.
This may be great for consumers who love low prices, but what does it do for the country as a whole when huge numbers of retail jobs disappear forever? All those people who used to work at the local department store can now use the unemployement benefits and then their life savings to buy discounted stuff on-line.
I fear America's going to be a very different place 10 years from now. We haven't munfactured much at all for years and we face a future of not selling very much either.
Can we all get jobs delivering things?
Pete, I'm just cynical enough to agree with you. I would not be all that surprised to see something along these lines happen.
ReplyDeleteAh, another cynic. C.B. I do wonder what this country will look like in 25 years or so when I'm ready to check out. Will I even recognize it or will I be living in the largest third-world country in the world? Nothing would surprise me with the awful leadership we have these days.
ReplyDeleteThe good news that I've heard on this topic is that Indie stores seem to have benefited from the big box stores struggling. I guess people that do want hard copy books prefer to go to a store where they can make a personal connection, get recommendations, etc.
ReplyDeleteI do suppose that this would mean that more indie stores would give it a shot...and might become "neighborhood" hubs again. That's the silver lining in this cloud, if there is one.
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