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Why Barnes & Noble, Inc Shares Dropped

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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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 April 04, 2014, at 5:43 PM, Kevinsims1824 wrote:

    Barnes and Noble is a company that needs to look towards the future and part of the future is give a reason for the customers to invest in it's continue existence.

    Why do i say that?

    Because.Barnes and Noble had a partnership with Microsoft for the Nook. Microsoft has decided to that they want to create their own e-reader. That is a day late and a buck short.

    So, Barnes needs to keep that customer base happy, but does not because there is no reason to support them at all. $25.00 for membership and nothing for those that are loyal to keep up their membership. Smart way to alienate that base that is keeping you around. Poor leadership from the top and the stock reflects it. Never put someone that was in charge of e- reader that was losing money in the first place in charge of the whole company. That is like having Charlie Sheen be your bartender at a wedding.

    Barnes and Noble may have won the battle but will lose the war.

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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Related Tickers

8/28/2015 4:01 PM
BKS $15.67 Down -0.02 -0.13%
Barnes & Noble CAPS Rating: *
LMCA $37.38 Up +0.26 +0.70%
Liberty Media CAPS Rating: ****