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Non-Tech : Barnes & Noble (BKS)
BKS 6.4900.0%Aug 19 5:00 PM EST
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To: American Spirit who wrote (1052)5/10/1999 3:23:00 PM
From: Chuzzlewit  Read Replies (1) of 1691
 
Doesn't it occur to anybody on this thread that BNBN by itself is a loser? Its true value is in the wholesale volume it will generate.

It will generate a huge business for Bertelsman and BKS. Consider some facts for the moment. Books are not fungible. That means that there are lots of actions that are carried out by people on an individual basis. Unpacking a shipment, and repacking on a one by one basis. That means that costs will be high and should behave as fully variable costs because the major component will be labor.

If you would take the time to examine the financials in the 10-Ks you would realize just how much profit BNBN has cost BKS. That means that BKS will become more profitable by spinning off BNBN and eventually having a secondary offering and unloading its entire stake.

This move is analogous to the drug companies spinning off their R&D arms. The difference, of course, is that BNBN will be able to stand on its own for a considerable period of time owing to the differential timing of cash movements. But just as AMZN will not be able to generate profit, neither will BNBN. And when the inevitable downturn in business comes both will bleed cash at a prodigious rate.

TTFN,
CTC
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