Borders keeps having Trouble

Rumors are that Borders will declare bankruptcy soon. The same link notes that 150 of 650 Borders stores are slated to close.

Borders receives de-listing warning from NYSE. Basically, the stock isn't worth enough to be listed on the exchange.


The loan from GE has a slew of conditions.

This 3rd link is the most important. Unless Borders can find lenders for another $300 million bucks, the GE load of $550 million isn't going to happen. Borders also has to find a way to make landlords allow Borders to walk away from the leases.

"Lukewarm" reception to junior debt is not something investors like to hear. I really doubt Borders can secure the GE loan without Bankruptcy court protection.

Borders needs to cut lease payment

Not all Borders locations are bad. The local two Borders are both ghost towns that unfortunately should be due for closure. :(

What really matters is that Borders closures will reduce the selection of print books. Yea... Borders isn't the store of 150k titles anymore (not after installed the larger coffee shop, toy section, etc. Yet it still carries more variety than B&N.

I have a few coworkers who are adapting to book store closings by buying either Kindles or the Nook Color. The 'Grand Dame' department secretary at work has become enamored of the Kindle. There is little point in yours truly trying to convince coworkers to buy Kindles, she is far more persuasive! ;) So for the overall book industry, the estimate 150 Borders closing will probably have little impact. I do wonder about the 'economies of scale' of print books.

In my opinion, this feels like film. As in film cameras. Once the top photographers went digital and Kodachrome (slides) went out of production, the downhill was quick from there. If you look at my prior post and extrapolate another year of 100%+ growth in ebooks (more likely 200%+), then I do not see how certain formats will thrive anymore.

Sometime in the next few months, the true fate of Borders and print books will be known.

Got Popcorn?
Neil

Borders misses payment

Borders 'delaying' paying vendors at yahoo finance

Borders delays paying vendors at WSJ subscription required.

I'm sure there are dozens more links by now...
From the WSJ (fair use): "In an ominous turn of events for the book business, Borders Group Inc. said Thursday it is delaying payments to some publishers, a sign that its financial troubles are worsening."


My take:
With their dire need to raise cash... I do not give them good odds. My two favorite local bookstores are Borders. But for every pbook (mostly kids books with a few gifts) we buy at Borders, we've bought: two at Costco, three at discount stores, and four to five on Amazon.

Does anyone know what share of the pbook market Borders now holds? All the reference I could find were 'obviously out of date.'

For the market share Borders holds (held?) determines the impact of this serious financial action that is generally a sign of bankruptcy. I believe Borders customers will go to alternate sources pretty much in line with their book market share (plus or minus clever marketing). In other words, if ebooks are say 15% of the book market, than expect 15% of Borders customers dollars to transfer immediately to ebook vendors.

Note: I expect Borders ebook store to keep operating post bankruptcy.

This is actually really sad for me as I used to happily spend 4+ hours in the local Borders. Then again that store killed off my favorite Crown books which killed off my favorite Indie bookstore... So 'sad' is relative. Perhaps 'sad at seeing the final stage of the transition.'

Neil

ps 12/31/2010
Forbes Video "Losing money for years and getting worse."

Everyone is speculating *if* publishers will continue to ship books to Borders. They're news timing is perfect (the announcement is likely to get lost in tonight's merry making).