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Non-Tech : Barnes & Noble (BKS) -- Ignore unavailable to you. Want to Upgrade?

To: Satellite Mike who wrote (260)	1/13/1999 8:41:00 PM
From: Stephen	Read Replies (1) \| Respond to of 1691

Mike ... somebody was joking the other day that there is no spelling error when you type 'internut' !! ....& I guess I'll find out if they are joking in a moment. As for the IPO ... some people had the foresight to buy DBCC at under 4 for the MKWT IPO. They had quite a wait ... but I'm sure they feel it is worth it. With BKS there may not be the same return, but the company is looking to have a stellar yr 2000, and has confirmed that they will meet earnings this qtr... so no warning is assured (after Borders!). However, as a word of caution, the price weakness is probably due to the high PE for unspectacular projected growth this year ... but I don't really care as when the IPO details come out and they don't have that expense, the books will look a lot better. Given that they will also own 50% of their IPO spin-off ... they are going to look awful cheap at twice this price imho. In the last couple of days, I've also seen people mention BKS in an indirect reference to their topic.... so its obviously not far away from their plans. I'm down on my investment so far ... but I only have half my position and was busy playing with ASND/CIEN/INHN today, otherwise I would have bought more ...frankly I also thought ASND was a better rebound play. I have no intention of playing with the internuts at these prices .... too much downside for a risk adverse person like me !!. So, I am happy to look a little further down the road. I prefer the less return/capital preservation no matter what happens model !! Good luck Stephen

To: Satellite Mike who wrote (260)	1/14/1999 12:22:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 1691

Mike, you said Let's face it, the book industry is far more internet compatible than most industries. I respectfully disagree. The problem is that there is entirely too much human intervention and warehouse space required, given the level of pricing. Michelle Harris, on the Dell thread, made what I believe to be a brilliant observation. She noted that e-commerce is best suited for commodities. That's why DELL is so well suited to this kind of business. I expanded her observation by noting that the fewer SKUs carried by the e-commerce vendor, the greater the probability of a profitable e-store. If you look at Amazon's 10-Q you will see that their variable costs are greater than their revenues. This in spite of the fact that they have outstripped their existing distribution center and need to build a new one. And they cannot push inventories upstream, because if they did shipping delays would be untenable. That means they need to carry tons of inventory (hence the need for a new distribution center). Oddly enough, these weaknesses in e-commerce are precisely the reasons I like BKS. They bought Ingram, which is the major book wholesaler in the industry. That means that they have created a real profit center and can use the web sales as a loss leader. In other words, because of their net profit derived from Ingram they can maintain pricing pressures on their competitors (who are still forced to buy from Ingram). This is a brilliant strategic stroke IMO. Bottom line: Barnesandnoble.com generate the sales and keeps the pressure on, but Ingram generates the profits. TTFN, CTC