Some people enjoy going to libraries and reading a hard copy of a book, and some people don’t. Many times people prefer to stay home with the kids and read a book on tablets such as iPads, Nooks, and other gadgets. These devices have seemingly overwhelmed the book industry, and one company is suffering more than others. The sudden rise of E-books and the dramatic fall of classic bookstores have both happened quickly, and certain companies have expanded people’s options of how to read even more.
Barnes & Noble, Inc. (NYSE:BKS) released statements that made some people wonder how long the company will be around. The company announced twenty store closings each year for the next decade – roughly one-third of their current locations. Barnes & Noble, Inc. (NYSE:BKS) lovers should note this won’t happen overnight for one main reason. The company can’t simply close a large amount of stores tomorrow due to operating lease commitments, which can’t be pulled like weeds out of a garden.
The company has very stiff competition, and seems to be fighting an uphill battle with large tech companies. Now, this might not be earth shattering news, but could fewer locations actually be better for Barnes and Noble? Yes, I believe it could be. Barnes and Noble accrues revenue of $7 billion each year and holds a market cap of $780 million. Competitive pressures are forcing Barnes and Noble to become very efficient at what they do. Investors should note that the goal isn’t to have the most locations, but rather to be more profitable.
Apple Inc. (NASDAQ:AAPL) boasted nearly twenty-three million iPads sold in Q4 and hold 43.6% of market share in the tablet world. Compare this to Barnes and Noble selling one million Nooks in the December quarter and the competition seems enormous. Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOG) both sold more tablet devices than Barnes and Noble as well. Amazon (NASDAQ:AMZN) sold approximately six million units and holds 11.5% of the market share. Google (NASDAQ:GOOG) sold 44.4% of all tablet sales by large vendors in Japan, which surprisingly beat Apple’s 40.1%. With that said, Google expects to release the Nexus 7’s follow up in May with worldwide expectations of approximately ten million sold in 2013. That’s not even half of Apple’s quarterly sales. With demand for the Nexus 4 greater than Google can produce, maybe they should ask Apple for production advice. Google only sold approximately 375,000 Nexus 4 devices from the first of November until the first of February.