Finding the right bookshelf for the Nook


What will the Nook’s future be?

Barnes & Noble’s Nook e-readers face fierce competition from the Kindle and iPad. B&N has tripled its advertising since 2009, adding to the huge development costs of the Nook, The Wall Street Journal reports. B&N’s EBITDA (earnings before interest, taxes, depreciation and amortization) have fallen to $163 million in the year ending April 2011 from $281 million the previous year.

One of the leaders of a minority shareholder firm recently said competing with Amazon and Apple is a “big-boy game” and that B&N may need partners to play that game. B&N, meanwhile, said it is seeking partners for overseas ventures.

The Wall Street Journal reports that the bookseller could possibly either sell a minority stake in the Nook line, setting up a separate management team, or sell the Nook brand outright.

I believe it would be short-sighted to sell the Nook brand outright. Barnes & Noble could very effectively use its brick and mortar stores – the ones that survive in the years ahead – to promote the Nook e-reader and its accessories. Bookstore customers are good candidates to buy e-readers. And Barnes & Noble and Nook can be co-promoted together if the corporation continues to own both brands. You lose that cohesiveness if Nook gets sold; even if a tech behemoth like Microsoft or Google buys the Nook, the new owner has lost that connection to a traditional bookstore and its customers.

Is Apple all that?


This report by Douglas A. McIntyre with 24/7 Wall St makes a case for Apple (AAPL) as the second-most valuable corporation in America, after Exxon Mobil, in terms of market value.

Apple posted record revenue of $20.34 billion in the third quarter of 2009. Revenue was up 66 percent from the same quarter a year ago. The total value of Exxon Mobil’s shares creates a market cap of $362 billion, while Apple’s is $284 billion. That’s ahead of such giants as Wal-Mart, the world’s largest retailer.

McIntyre cites analysts, who point to Apple’s rapid growth, which he says is unmatched by any other major American corporation. With hot-selling iPhones, iPads and Mac computers, the analysts may be right.

 

But I can’t help thinking of the changing taste of consumers. Exxon deals with oil, perhaps the world’s most valuable commodity, while Wal-Mart of course sells such a large diversity of products and has a reputation of selling for less. Apple has done well to move beyond simply selling computers. Yes, Apple’s products are fashionable. But they are only into one segment of the economy: consumer electronics. Changing consumer preferences or bad publicity (such as the iPhone antenna problem) or the eventual loss of magnate Steve Jobs could upset the Apple cart. So I would urge caution when looking at Apple as an investment. What goes up can — and often will — go down.

 

%d bloggers like this: