Barnes & Noble (NYSE:BKS) was one of last week's biggest winners, soaring 11% after a pair of senior executive hirings for its Nook business and a rosy outlook on the books that will likely be big sellers this holiday season.
Mahesh Veerina starts his tenure as COO for Barnes & Noble's Nook division today. Veerina sold a mobile software company to Motorola three years ago, and he stuck around at Motorola until 2012. Doug Carlson assumed the role of executive vice president of digital content and marketing last week. He was the executive chairman and managing director for digital magazine newsstand Zinio before last week's appointment.
These are certainly sound moves, but the Nook doesn't stand much of a chance against Amazon.com's (NASDAQ:AMZN) market-cornering Kindle these days.
It's easy to see why Barnes & Noble wanted to get ahead of the traditional bookstore disruption by introducing its own platform. It didn't want to wind up being the next Borders. However, this game was over the moment that Amazon began slashing prices of its Kindle line. The e-reader that was introduced at $399 nearly six years ago can now be had for less than $69.
There's nothing wrong with Nook, and Barnes & Noble has even raised the bar for Amazon a couple of times. However, it's hard to compete with Amazon's cutthroat ways. Barnes & Noble is hungry and desperate enough to wage this price war on e-readers, but it doesn't have the resources that Amazon has to outlast the competition.
As for the pipeline of new books, Barnes & Noble issued a press release rattling off more than three dozen highly anticipated releases that will be hitting the market in the coming weeks.
"This is the strongest Fall lineup of books for adults, kids and teens in years," CMO Jaime Carey said in last week's press release. "This amazing list makes it a book season like no other. We are already seeing strong demand for new releases both in our stores and online."
So, can Barnes & Noble keep the gains coming?
It's hard to argue with Carey's enthusiasm, but Wall Street doesn't see it that way.
Analysts see the chain of meandering bookstores posting a profit during the holiday quarter. It's the only time of year that Barnes & Noble is in the black, but not by enough to offset huge losses incurred during the balance of the year. However, those same pros also see sales sliding 5% during the quarter.
There seems to be little hope on that front. Analysts see Barnes & Noble's annual deficit widening in the next fiscal year on yet another revenue slide.
Amazon, on the other hand, is rocking as it disrupts both Barnes & Noble's namesake stores and its fledgling Nook business. Analysts see profitability more than tripling in its holiday quarter on a 22% pop in sales.
A strong holiday showing on the retail front could buy Barnes & Noble some time. But if sales continue to decline the way that the pros are forecasting despite the greatest book lineup in years, there's little reason to remain invested in a company that can't afford to whistle by Borders' grave.
Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. 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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