Sometimes timing is everything.
I have to think this would have been a far lower number had the deal been initiated in the current economic environment. Books aren’t exactly a bulletproof commodity in uncertain times. For instance, lets take a look at Barnes & Noble’s third quarter results (emphasis is mine).
For the thirty-nine weeks ended November 1, 2008, the company had a net loss of $5.2 million as compared to net income of $20.8 million in the prior year.Â The net loss includes the third quarter charge noted above as well as a $5.0 million after-tax charge from the first quarter relating to a tax settlement.Â Excluding these charges, the company achieved net income of $6.8 million year-to-date.
â€œA significant drop off in customer traffic and consumer spending impacted our business in the third quarter,” said Steve Riggio, chief executive officer of Barnes & Noble, Inc.Â â€œIn a challenging environment with a comparable store sales decline of 4.6% this year, the company has aggressively managed expenses to operate profitably.Â Furthermore, the company is taking measures to reduce expenses for the balance of this year and next.â€
I’ve also charted some of the troubles of Borders Books, the number two US bookseller. And things haven’t gotten better since I last checked in. Despite management’s attempt to put a silver lining on the numbers, Borders Books third quarter results are ugly (emphasis if mine).
On an operating basis, the consolidated loss from continuing operations for the third quarter was essentially flat with the same period a year ago at $39.0 million or $0.64 per share, compared to $38.4 million or $0.65 per share in the third quarter of 2007.
But how about sales?
Borders Group achieved third quarter consolidated sales of $682.1 million, a decrease of 10.0% over 2007.
Certainly the new Borders.com is doing well, right?
Sales through Borders.com in the third quarter totaled $11.9 million, which is below management expectations due to the challenging sales environment. As a result, Borders Group does not expect Borders.com to break even this year as previously stated.
Amazon isn’t faring that bad with third quarter results that show a 31% increase in sales and 48% increase in net income. But look closely and you’ll see that the outlook for books might not be so rosy.
Worldwide Media sales grew 19% to $2.49 billion, compared with $2.09 billion in third quarter 2007.
19% isn’t the same as 31%, that’s for sure! If you dig a bit deeper, the North America sales growth was just 15% and I’d bet dollars to donuts that the books portion of ‘Media’ was a laggard in this group.
Given the weakness in books and a projected economic doldrums, did Amazon overpay for Abebooks?