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Politics : Idea Of The Day
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To: IQBAL LATIF who wrote (17321)3/12/1998 9:39:00 PM
From: Mary Cluney  Read Replies (1) of 50167
 
Dear Ike, Safe journey. I just noticed that Barnes and Noble (BKS) reported record earnings with eps up 41 percent and beating street estimates 1.03 versus 96. Their annual sales $2.78B is greater than their market cap of about $2.6B. More importantly they are now generating free cash flow of $47M - this will help them to invest in their online business:
barnesandnoble.com.
If their internet business were valued the same as AMZN then their bookstore business of $2.78B would have a market cap of about $600M.

My conclusion is that either AMZN is greatly over valued or BKS is tremendously undervalued. Conceivably BKS could also be overvalued. But, if that were the case then what would this do to AMZN. As far as I can see the situation can not stay this way for very long. There will be great volatility in these stocks and an opportunity for astute investors.

What do you think?

BTW I think the Barnes and Noble book stores are terrific and their website is easy to navigate and easy to understand. What will stop these people from investing their positive cash flow from their book business for online selling of books, music,software, or anything else they want to sell? Become something like the Home Shopping Network or QVC online.

Regards,

Mary Cluney

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