Barnes & Noble Catches a $900 Million Break

Barnes & Noble Catches a $900 Million Break

It looks like the Barnes and Noble business model has caught a break.  We suggested that B&N could profit significantly by simply buying the faltering Borders in our column
Is Barnes & Noble’s Business Model in Trouble
.  Evidently, good things come to those who wait because Borders has decided to liquidate all holdings and close their remaining stores.   There is no need for B&N to fork over the paltry $900 million market capitalization for Borders now.  Vulture capitalists rejoice!

Our calculations show that Barnes & Noble’s business model will add over $150 million dollars in margin simply from the Border’s spillover.  Congratulations B&N, you are winning the war of attrition.  All that is needed to completely revitalize the business model is for Wal-Mart and Amazon to fold up shop too.

Typically, when an industry is losing competitors to bankruptcy, forced merger, or underperforming division shedding, it is the final sign of a dying industry.  Barnes and Noble may be the only big player left, but their business model may still be in trouble.  Borders exit may give B&N a couple years of good profitability but general industry erosion will rear its ugly head in no time. 

What should Barnes & Noble do to improve its business model?



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