Barnes & Noble Founder Wants to Take Retail Division Private 131
The times haven't been the kindest to B&N: retail sales are down and the Kindle is outselling the Nook. Joining Best Buy and Dell, B&N might be going private. From the article: "Barnes & Noble’s largest shareholder, Leonard Riggio, made an offer Monday to buy out the struggling company and take it private ... Essentially, it would split the company in two: one half would be Riggio’s private brick-and-mortar stores and related assets, the other the publicly-traded Nook and college bookstore management division."
Blame the market bulls ... (Score:5, Insightful)
Public companies are getting abused on the stock market so bad being private means they can actually run the business properly without having to worry about squeezing to make every Q more profitable according to analyst projections and "expected" profits.
Apple should do the same but having 1bn outstanding shares at $400 a piece means even their whopping $130bn in the bank wont even save them from the onslaught.
Re:Blame the market bulls ... (Score:3, Insightful)
That only happens with companies that are failing anyway. Its in nobody's interest to destroy a thriving business, or at least one that is worth more alive than dead. What people fail to understand (hence Obama's ads about Romney at Bain) is that capitalism is as much about failure and loss as it is about success and profit, and that's a good thing.
Re:I don't understand (Score:4, Insightful)
Nobody caught this but what I see is he's simply doing a land grab. All of the real property (stores and such) is worth quite a bit of money and he wants it all for pennies on the dollar. If he's successful, those physical locations can then be sold off for 10-100x what he paid out to take the company private. Very nice profit for him.
Re:Blame the market bulls ... (Score:3, Insightful)
What else are you supposed to do with those Trillions of dollars the Fed loaned you at zero interest?
Re:Blame the market bulls ... (Score:5, Insightful)
That only happens with companies that are failing anyway. Its in nobody's interest to destroy a thriving business, or at least one that is worth more alive than dead.
[Citation Needed]
More importantly, you are making assumptions about what is and isn't rational behavior from your perspective.
From the perspective of a corporate raider:
Mortgaging a healthy company to the hilt and then selling off its assets is wildly profitable.
They don't want to run the company and earn a respectable return on investment.
They are not in it for long term profits.
They want X00% return on investment within a few years and they can get it.
Different motives and different agendas leads to different 'rational' behaviors. /. story today which showed us that 'rational' behavior is not a universal constant [slashdot.org]
Hence regulation to reign in the more destructive, yet completely rational, actors.
There was even a
Interest rates are too low. (Score:4, Insightful)
What fuels "going private" are two things - low interest rates, and that interest paid by companies is deductible. "Going private" really means "leveraged buyout".
Companies can pay for their capital through dividends to stockholders through stock buybacks which push up the stock price (or compensate for dilution through stock options), or by paying interest. Only the first is taxable.
Tax policy and "quantitative easing" (i.e. central banks lending money at very low rates) fuel leveraged buyouts. Without those factors, "going private" would be a very rare event.
Good riddance. (Score:2, Insightful)
The last three times I was in a B&N, I couldn't find the book I was looking for. Oh, they could order it, of course. The hell is the point of that? I can order it, through my Magical Intertubes.
It's not just bookstores, however: I've been disappointed in every category of store you can think of; failing to find the products I seek.
There's little sense in wasting time, gas and aggravation. The savings in all three more than make up for the slight delay and cost of shipping.