That fourth-quarter net loss added up to $73.6 million, or $1.25 per share. If you back out charges, Borders earned $1.61 per share. Sales increased just 2.9% to $1.5 billion.
Getting to the crux of the matter, though, which seems to be future plans, Borders' new strategies include backing away from international expansion, continuing to pare down the number of Waldenbooks locations, and expanding its own publishing operations.
Maybe the most interesting element of Borders' strategic plans, though, is that it will no longer rely on Amazon.com
Amazon was always a strange partner, given the fact that it also represented serious rivalry (talk about a love/hate relationship), but that sort of thing has been prevalent online, since the Internet makes strange bedfellows. Borders' new strategy shows just how much growth there has been in online bookselling, and it would rather take on the expense of setting up its own site than pass it off on a partner that shares the spoils. The fact that Borders launched Gather.com earlier this year shows that Borders sees the writing on the wall in terms of how helpful the Internet can be to bookselling.
And this isn't without precedent. Just flash back a couple of years and you might recall the difficulties the toy industry faced, given cheap toys provided by rivals like Wal-Mart
Commenting on how this will affect Amazon if more partners decide to branch out on their own online and ditch their Amazon-related sites is another story for another day. Another big-name partner is Target
I've felt uneasy about Borders' difficulties with profitability and absence of free cash flow in recent history. Now the company describes 2007 as a transitional year, so it doesn't want to provide guidance, although it aims to restore growth by 2008. Although a serious change in Borders' strategy is more heartening news, it sounds to me like the coming year might give investors better opportunities to buy into Borders -- and of course, that will only be prudent if it seems certain Borders can pull off these major changes.
Page back to recent Foolish articles on Borders and booksellers:
- Despite Harry Potter's imminent arrival, there's little magic for booksellers right now.
- Borders launches its Gather site.
- Revisit Borders' third-quarter results.
Alyce Lomax does not own shares of any of the companies mentioned.