Why Barnes & Noble, Inc Shares Dropped

Is this meaningful? Or just another movement?

Apr 3, 2014 at 4:37PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Barnes & Noble (NYSE:BKS) took a spill today, falling as much as 16% after Liberty Media (NASDAQ:LMCA) said it sold nearly all of its stake in the ailing bookseller. 

So what: The media conglomerate has entered into an agreement to unload 90% of its holdings in a deal expected to close by April 8. Liberty had originally invested $204 million back in 2011 for preferred stock that was convertible to about 16.6% of shares outstanding and paid a dividend with a yield of 7.75%. The sale seems to reflect the flagging hopes for the Nook, Barnes & Noble's e-reader that at one point was seen as the company's savior.

Now what: With the sale, the bookseller will also lose Liberty CEO Greg Maffei from its board, a negative for the company, as Maffei is seen as a respected business leader and dealmaker. Barnes & Noble Chairman Leonard Riggio pointed out that Liberty's decision gives the bookseller "greater flexibility to pursue strategic options," as Liberty's stake had come with a right to block any assets sales, which could include selling the Nook unit or Riggio's one-time desire to take the retail business private. Still, Liberty's sale seems most reflective of the Nook's failure and the unlikeliness of Barnes & Noble returning to profitability. 

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of Barnes & Noble and Liberty Media. 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.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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