Thursday, April 7, 2011

Barnes & Noble Bankruptcy Index: No news this week (Only plans for Android Apps on Nook..)

Nothing important happened this week and this week our B&N bankruptcy index is showing no change. Just a short reminder - As Borders filed for bankruptcy, we look at Barnes & Noble, the nation's largest book chain to see if they will follow Borders and also go into bankruptcy and if so, when exactly.

To do it more analytically we launched few weeks ago a new B&N Bankruptcy Index, which is based on 10 parameters, which receive a grade between 1-10 (1 - worst grade, 10 - best grade). Hence we receive a 0-100 point index scale, which we divide into several ranges as follows:

90-100: B&N is in an excellent shape. Couldn't be better!
80-89: B&N is doing great. Bankruptcy is no longer a real threat.
70-79: B&N could do better and has to be cautious of bankruptcy.
60-69: B&N doesn't look too good and bankruptcy is becoming a more realistic threat.

50-59: Bankruptcy is a clear and present danger.
49 and less: Red alert! Bankruptcy is just around the corner and is likely to happen within a short time frame.

We will check the
B&N Bankruptcy Index every Thursday, updating each one of the parameters included in the index and will analyze the trend. You can follow the weekly changes in the index from the day it was launched on the Barnes and Noble Bankruptcy Index page on our website.

So here's our update for this week (in brackets is last week's grade):

1. Confidence of the stock market in B&N

This parameter will look at the performan
ce of the B&N stock (symbol: BKS) in the last week. The performance of B&N's stock is an indication of the confidence the market has in the ability of B&N to maintain a viable business.

So let's look at last week's figures:

3/30: $9.75
4/6: $9.58
Change: -1.77%

As you can see, B&N's stock fell slightly down last week (-1.8%). Just for comparison, Amazon went up 1.8% last week and the S&P500 Index also gained 0.55%.

It doesn't look like anything significant happened this week on the stock market and therefore this week's grade for this parameter stays the same: 4.5 (4.5)

2. What analysts say on B&N

We didn't find any references this week (I told you it was a quiet week..) and therefore our grade stays the same: 5.5 (5.5)

3. New strategy to regain sales in the brick and mortar stores
Just like Borders, B&N still doesn't have yet a clear and comprehensive strategy that will transform their brick and mortar stores from a liability back to an asset. Nothing happened this week, but I want to take this opportunity and mention the article I published this week on Triple Pundit, offering B&N to consider a green strategy for its stores. This week's grade stays the same: 4 (4)

4. What B&N is saying about itself
No updates here. This week's grade for this parameter stays the same: 6 (6)

5. Steps B&N is taking
Nothing happened this week (only few development on the digital front, which you can find more details on under parameter 8 - the strength of the digital business). This week's grade stays the same: 6 (6)

6. Competitors
This parameter will mainly look into Borders and how its problems affect B&N.
This week Borders, according to the NYT, "presented a restructuring plan to its creditors on Wednesday that promised publishers and landlords a sleeker, more efficient company poised to emerge successfully from bankruptcy through increased online sales and revamped stores." Publishers, according to the article, "characterized the plan as unrealistic and said they were more convinced than ever that Borders would be forced to sell itself or liquidate." Good or bad news for B&N? We'll see about it. In the meantime, our grade stays the same: 5 (5)

7. Financial strength

Couple of weeks ago Barnes & Noble published the results for the third quarter. We don't have any updates for this week and our grade stays the same: 7 (7)

8. Strength of the digital business

This was the most active part in B&N this week - AllThingsD reported earlier today that "Barnes & Noble Moves Forward With Plans To Allow Android Apps on Nook", explainning that "The company released new tools for those looking to create apps for the e-reader and said it plans to offer developers 70 percent of revenue generated through its store, with Barnes & Noble getting the remaining 30 percent. Free apps will also be allowed, as well as the ability for developers to offer trial versions of their programs." CrunchGear reported that "Barnes & Noble just announced that they’re opening their Nook platform to developers and will now begin accepting apps."

Also, TechCrunch reported that "a week after Amazon Kindle New York Times subscribers received word that their subscriptions granted them free access to the paper’s website, Barnes & Noble Nook subscribers will also soon be able to access for free."

This week's grade stays the same: 8 (8)

9. Sense of urgency
It looks like B&N still think they have time and are not worried at all, or at least not worried enough to begin doing something with their brick and mortar stores (again, we don't believe more toys in the stores and extra room for the Nook is a winning strategy). If we can learn something from the Borders' case, it's how fast things go bad when your reach a certain tipping point of financial distress or distrust of your stakeholders (consumers or publishers for example). This week's grade stays the same: 5.5 (5.5)

10. General feeling
This parameter will be an indication of our impression of all the materials read and analyzed for this index. Our feeling that things are still not looking too good for B&N hasn't changed this week and
this parameter's grade stays the same: 5.5 (5.5)

This week's Barnes & Noble Bankruptcy Index: 57 points (57)

As you can see, this week's index is set at 57 points, which means B&N is getting deeper into the 50-59 zone: Bankruptcy is a clear and present danger. It's still not the red zone but it means that bankruptcy is getting closer and is becoming a real threat to B&N. See you next Thursday.

To view the weekly changes in the index visit Barnes and Noble Bankruptcy Index on our website.

You can find more resources on the future of bookstores on our website at

Raz @ Eco-Libris

Eco-Libris: Working to green the book industry!

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