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Non-Tech : Barnes & Noble (BKS)
BKS 6.4900.0%Aug 19 5:00 PM EST
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To: Lane Hall-Witt who wrote (1229)5/17/1999 10:44:00 PM
From: Glenn Petersen   of 1691
 
Your analysis ties into the calculations at:

Message 9431178

That analysis benchmarked the BKS bricks and mortar against BGP and came up with a valuation for the bricks and mortar in the $19-20 range. I'm beginning to think that BGP may actually be undervalued. It has a 52 week high of 41 1/2 and an impressive track record. The implosion of their stock price was not caused by a poor performance but is more related to the perception that they do not have a successfully thought out strategy for the Internet. Check their results for the last five years:

Operating profits for the years ending January 31,
1999: $167.3 MM
1998: $138.0 MM
1997: $103.1 MM
1996: $ 64.5 MM
1995: $ 50.2 MM

BKS and BGP continue to aggressively add more stores, and even though sales in the book industry are flat, BKS, BGP and AMZN continue to grow at the expense of the smaller independent stores. My point is that we may actually be undervaluing the bricks and mortar for both BGP and BKS.

I am also beginning to think that it is going to be difficult for BNBN to sustain a price in excess of $40 per share. At that price, BNBN would have a market cap equal to approximately 25% of the AMZN market cap, yet their sales for the first quarter were equal to only 11% of AMZN's sales. At this point, BNBN is an also ran to AMZN in the book business and suffers from a lack of diversity in its product offerings.
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