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This Company Isn't Done Dropping

By Austin Smith | More Articles
December 10, 2011 | Comments (5)

The following video is part of our "Motley Fool Conversations" series, in which Motley Fool technology editor Andrew Tonner and consumer goods editor Austin Smith discuss their favorite stocks.

In today's edition, Andrew and Austin talk about one company they've been pretty down on lately, Barnes & Noble. They're still pretty negative on its future going forward. The company's tablet, the Nook, has impressive sales growth, but is still a distant third in the race behind Amazon and Apple. Its e-books have the potential to cannibalize its own bricks-and-mortar business. Ultimately, Austin and Andrew don't see the company in any better position than other bricks-and-mortar retailers showing weakness right now.

How to profit where Barnes and Noble is whiffing
The growth of Barnes and Noble's tablet is more smoke and mirrors than truly lasting performance. But that doesn't mean everyone is missing the memo. Austin discovered one such company the other day while talking with the Fool's senior technology analyst, Eric Bleeker, and it could be one of the greatest disrupters over the next decade. The company is a major mobile player that has roots in some of the most important technological advancements and patents of our time. To check out details about this company, you can read our brand-new, FREE, special report, "The Next Trillion Dollar Revolution." Click here to access it, absolutely free.  

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

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Neither Austin Smith nor Andrew Tonner own shares of the companies listed above. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 10, 2011, at 11:27 AM, JackCaps wrote:

    About 15 years ago I had reviewed financial statement to compare the average days to sell inventory between Amazon and B&N for an MBA class. (Back then, Amazon was still mostly an online book retailer.) B&N then used about 6 months to sell an item while Amazon needed only about 2 weeks. That difference shows how Amazon has changed the competitive environment for B&N since its initial rise in the late 90's. B&N has been slow to grasp the significance of the technology changes happening all around them. Now that they are attempting to match Amazon's service and product offerings. This seems to be a case of doing too little too late.

  • Report this Comment On December 10, 2011, at 1:05 PM, TMFBWItime wrote:

    @JackCaps

    I 100% agree. I've been down on BKS for awhile as I feel many of their strategies are too little too late.

    Fool on!

  • Report this Comment On December 11, 2011, at 8:44 PM, rdare wrote:

    @JackCaps

    Oh, how MBA of you to apply 15 year old memories to current market trends. Can I ask you what did your analysis of APPL predicted 15 years ago? Seven years prior to the invention of iPod?

    How can you say that B&N is slow to grasp anything when they were the FIRST to come up with the color eReader?

    Not done dropping yet? When was the last time you checked the ticker.

    http://ycharts.com/companies/BKS/price#startDate=10/22/2011&...

    Speaking of Fire

    (as of right now 4600 reviews out of which 600 are 1 stars and 400 are 2 stars):

    NO password protection for kids or thieves to make 1-click purchases?

    How long before parents realize, wait a second, this just may turn out the most expensive purchase ever?

    DOES NOT work outside of the U.S.

    read angry comments

    1 out of 5 kindles are being returned. How long is this going to go on, before people catch on?

    On top of the lower quality, lower memory, cloud-that-cannot-be-accessed-to-read-the-books-you-bought, the absence of design, volume buttons, wi-fi issues with D-Link and Belkin routers, carousel issue etc...

    BKS earnings HAVE improved in spite of the fact that BORDERS was selling books at 80% off for most of the quarter.

    BKS earnings HAVE improved in spite of the fact that they have not started offering over 10,000,000 online products until this quarter.

    BKS NOOK sales have gone up 85% in 3 months BEFORE new nook came out, BEFORE holiday season.

    Annualized sales of NOOK alone at 1.8bn is DOUBLE of what BKS's market cap is right now.

    I used to pay attention to Fools many many years ago, now it seems like there isn't a hint of original opinion. Blah-blah-blah-Amazon-Blah-Blah-Blah-Barnes-And-Noble-Bad. Useless articles at a rate of 15 a day.

  • Report this Comment On December 11, 2011, at 8:54 PM, rdare wrote:

    Saying that sales of Nook will cannibalize B&N brick-and-mortar stores is like saying that sales of iPad will cannibalize APPLE's brick-and-mortar stores (there are almost 250 of APPLE stores last time I checked).

    Most of the Barnes and Noble stores are setup in a way to immitate Apple's "Genius Bars" and are flooded with customers.

  • Report this Comment On December 14, 2011, at 1:05 PM, FoolsAreTools wrote:

    These two young males chatting about Barnes & Noble is like watching a young Republican's version of "Wayne's World". Fortunately for B&N, gadget addicted young males don't make up the majority of the book market. They do make up the majority of bloggers on Fool.com, and their opinions do reflect the biases of that demographic.

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