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Non-Tech : Borders Group (BGP) -- Ignore unavailable to you. Want to Upgrade?

To: blankmind who wrote (204)	2/22/1999 12:30:00 PM
From: Jacques Tootight	Read Replies (3) \| Respond to of 411

Just placed my sell order. Everyone will take from the WSJ article the salient points they wish to emphasize. The article confirms for me some things that have troubled me for awhile. The company slashed its TV advertising budget last year because it wasn't certain the ads significantly improved store sales. But barnesandnoble.com was spending millions on a nationwide TV and print campaign, a move that drove people to its sites as well as its stores. Borders executives say they are uncertain how much they will spend on advertising and promotion this year. It is especially apparent that none of those employees with pierced body parts has ever had a course in Marketing 101. The last sentence also indicates that management still doesn't "get it". This article, published today in the WSJ, a periodical for investors, reflects current information and current thinking. Pfeffer had a golden opportunity to tell the market a new story, hype the company, put a positive spin on things, change some minds. So what does he say? The stores look cluttered, I'm painting them, putting up new signs, changing the logo colors. And oh yea, we're giving everyone a cup of coffee. Give me a break. And all DiRomauldo wants to talk about is how insane the internet is. This is not what the market wants to hear. Opportunity lost. This was a feature article in the market newspaper, a chance to convince Mr Market that they now had it going and were going to start kicking butt. What do we get? Yea, we blew it, but we're gonna give everybody coffee! Just clueless. Until this company learns how to talk to the street and promote itself this stock is going to stay in the toilet. They blew it alright. Big time. Again. I'm outta here. RC

To: blankmind who wrote (204)	2/22/1999 12:32:00 PM
From: Trevor Quest	Read Replies (1) \| Respond to of 411

Blank. Good article. Here are my 2 cents... 1. No doubt BGP is running third in the internet game behind AMZ and BKS. Is this good news? No. Is it bad news? No. The web site is good and BGP has the resources to make it better. 2. Just as important as having a product on the internet today is being able to deliver on the internet tomorrow. BGP is in a better position then given credit. They have a tremendous distribution system and the CEO comes from the distribution channel. When everyone else has the same price, shipping will separate the big boys from the rest of the pack. 3. Excellent strategic alliances. The exclusive with GO.com can't yet be messured in $$$ because Go.com just came on line last quarter. Will sales pick up after the Webcast of the Grammy's? You bet! 4. Europe. Europeans are not as quick to jump on the trend. Amazon does not have the same international name recognition and it will be a few years yet before Europeans are on-line and buying. This gives BGP time to catch up and close the gap. 5. BGP can offer people something AMZN can't. The idea of going to a Boarders store and logging on while sitting in their cafe. Its a differential advantage that can't be mimiced easily. I am not saying BGP will be better then AMZN of BKS or anyone else who commits to the market. What I am saying is at 1.1B market cap BGP looks cheap next to the 2.2B of BKS and 16.3B of AMZN. Sorry for the long, rambling post - but if anyone made it this far I am interested in comments. Trevor

To: blankmind who wrote (204)	2/22/1999 5:13:00 PM
From: Sam Citron	Respond to of 411

The way I look at it is that the future is more about etail than retail. Sure people will continue to pick up books at bookstores (at least for the next 25 years or so when ebooks and ebook downloads may make this distribution channel obsolete) but there will be very little growth in this category, and growth it is what excites investors. Sure online bookselling is competitive hell, which is why BGP has been so slow out of the gate. It didn't want to hurt its margins. But now it must play catch-up because of the competitive threat. Problem is that its etail efforts threaten to cannibalize sales at the store channel. But you've got to compete so you offer it at list minus 10% at the store or list minus 30% online. Soon it will be list minus 70% online with no shipping costs but you will take delivery in bits into your ebook. If you are selling a commodity at 1% more than the next guy in the new world of shopping bots, you are toast. In this kind of environment volume is king, because you can then command the best deals from the distributors. In this kind of environment you will probably be in trouble if you are just an online bookstore, because you will lose out on opportunities for cross-pollination and cross-subsidization with sales of other categories. Amazon knows this and has much bigger ambitions than simply to be an online bookseller. The reason Amazon has targeted books, music and video first is that because these are information products, they have the greatest potential for electronic distribution. It is surprising that Amazon is not yet selling software. For this reason, I think they AMZN may yet prove vulnerable to others like buydirect.com (today bought by BYND) who have more experience with e-distribution channels. Note that @Home is a venture investor in buydirect and that a cable modem makes a download of a CD, book or software less than a one minute transaction. Now this is far from Border's business model and I doubt if they will ever take the lead in the category of online booksales. Amazon is just the first of their worries there. Buy.com and a host of others will also be serious contenders. So the question to ask is what must Borders do to defend its turf and is this war winnable. These are difficult questions with no easy answers. It will take strategic planning consulting engagements with McKinsey & Co to get the right strategy. I do not pretend to have the answers. Sure the stock is cheap, but the challenges are daunting. In the meantime, there's nothing wrong with offering a free cup of coffee to help get browsers into the stores. That's one strategy that Amazon can't touch!