Conference nyoss1::market_investing

	Their listed on the NYSE currently at 28 5/8.

	They have great book stores and their prices are excellent.

	I wonder what their financials look like?

>	I wonder what their financials look like?

I believe that they have a lot of debt.  A few weeks ago the WSJ had a story
on their IPO stating that this was the second attempt at it, with the first
failing because of a very poor (very high debt) balance sheet.  They did
some restructuring, and the IPO happened the second time.

John Piekso

My opinion is that the valuation on Barnes & Noble at current prices
looks terrible.

I studied the prospectus a couple nights ago.  Barnes & Noble (BKS)
lost money the past 2 fiscal years, largely due to big interest expenses.
This year they should be marginally profitable.  Next year they should
make good money- say net earnings of about $15-20 million - or .50-.70/share.
This assumes a nice gain in their operating profit (EBIT) and much lower
interest expenses as a result of the $160 million they received from the 
offering.  

Even under the most optimistic forecast, BKS is now trading at 41 times
NEXT years earnings (and 58x earnings of .50/share).  For a company that
should likely grow at 30%/year at best, and more likely about 20%/year,
this earnings multiple looks a bit rich.  

One caveat would be that crowd psychology can override sound reason
(valuation analysis) for long periods of time, so the stock could rise
for awhile despite the lousy valuation.  Look at Snapple for instance.  
Personally, though, I don't think BKS has a high enough growth rate to 
excite investors for long, and I'm short the stock.

    I like the local B&N bookstore; in fact every time I enter it's usually
    $100 to get out :-)
    
    But B&N has no proprietary secret.  Anybody could open a competing
    store and in fact I think we'll see more catalog-type stores offering
    the same B&N service and overnight delivery.  Less inventory, smaller
    staff, no real estate, thus better profit margin.  (I'm not talking about
    closeouts like Publisher's Central bureau, I'm talking about current
    best-seller catalog bookstores).
    
    I don't see how B&N's profits and growth can be sustained; they will
    attract too much competition.
    
      John

    One area that B&N has a good market in is college bookstores.  College
    texts always make a lot of money for the booksellers.
    
    Bo

    
    Of course if there's profit to be made in a business, this will
    eventually attract competition.  Currently, I don't think that BKS's
    has much competition right now.  Has anyone been to a better bookstore? 
    I certainly haven't.
    
    Eventually, competition will come up and then it may be time to start
    thinking about getting out.  But for now, I'd say they are in a good
    position.
    
    Snapple flourished for a while with its ice tea beverages; but when the
    larger companies started to compete, Snapple had serious competition.
    
    Does anyone have more info on BKS's capital structure?  What is the
    debt/equity ratio? and is it comparable to other companies in its
    class (i.e. retail booksellers)?  Also note that BKS's parent I believe
    is B Dalton Booksellers.
    

I posted an earlier note mentioning that I was short this stock.
I am no longer short, having covered last week at 21 5/8.

BKS no longer looks extremely overvalued to me at these prices (although
its no great bargain either), and it is a good company.  
I have a little adage about shorting - I feel the last 10% of a move in
a rising stock which you own is worth holding on for, but the last 10%
in a declining stock which you are short is not worth waiting for.
The reason being that when you short stocks you receive diminishing return
as it goes down.  10% down from $20/share is less money in your pocket
than 10% down from $30/share was.  The reverse happens with long positions.