Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Barnes & Noble, Inc. (BKS)’s Problems Are Bigger Than Nook

The nation’s largest bricks-and-mortar bookstore Barnes & Noble, Inc. (NYSE:BKS) admitted defeat yesterday by abandoning its attempt to compete in the tablet market.

The world wasn’t shocked.

Barnes & Noble, Inc. (NYSE:BKS)

Even without the benefit of hindsight, the hubris displayed by Barnes & Noble, Inc. (NYSE:BKS) executives throughout the whole process was laughable. On yesterday’s conference call, during which they discussed the company’s quarterly results, its executives were curt and unresponsive to analyst questions. It was a poor showing to put it mildly. One would have been excused for expecting humility given that they had just overseen the biggest quarterly loss in the company’s history.

When the first Nook Color was introduced at the end of 2010, it was pitched as a state-of-the-art, ground-breaking device. The “world’s first color ereader.” It was even lauded as a desirable alternative to the Apple Inc. (NASDAQ:AAPL) iPad, which Barnes & Noble, Inc. (NYSE:BKS) CEO William Lynch said was too heavy and too expensive. At the time, it sounded like naïve, pie-in-the-sky ambitions from a young and inexperienced CEO, which Lynch was at the time (and arguably still is). But now, it’s nothing more than a massive failure that’s cost the ailing bookstore chain hundreds of millions of dollars at a time when it simply couldn’t afford it.

To be clear, the Nook is not the problem. It’s rather a symptom of the way the company has been mismanaged. I discussed this last year in an article about Chairman Len Riggio’s classic covetous overreach to extract value from the company without selling his shares — which, of course, would have tipped off other shareholders as to the prudence of doing so. Instead, he sold Barnes & Noble, Inc. (NYSE:BKS) the stores that now make up its college division, sending the tangible book value of the company from above $500 million down to a negative $330 million.

And I was reminded of this fact again yesterday. Despite my lack of confidence in the way Barnes & Noble, Inc. (NYSE:BKS) is managed, I’m nevertheless a frequent and loyal customer. During a visit yesterday, I asked the person manning the Nook desk what he thought about the news. I figured that he’d at least have an opinion considering where he was working in the store. But to my surprise, he hadn’t heard anything about it.

So there you have it: At the same time that Barnes & Noble, Inc. (NYSE:BKS) executives hide behind a telephone receiver and effectively refuse to answer legitimate questions from analysts, they leave their poorly paid foot soldiers on the proverbial front lines without so much as a heads-up that a seismic change is under way. Suffice it to say, both Barnes & Noble’s shareholders and employees deserve better.

The article Barnes & Noble’s Problems Are Bigger Than Nook originally appeared on and is written by John Maxfield.

John Maxfield has no position in any stocks mentioned, and neither does The Motley Fool.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!