Amazon Buying Borders? Don't Bet on It - Stifel

Earlier this week, the hedge fund manager William Ackerman of Pershing Square Capital Management floated the idea that the book retailer Borders Group (BGP) should consider selling itself to Amazon.com (AMZN). That would be certainly be a good thing for Ackerman, since Pershing Square owns about 30% of Borders. He compared the concept of Amazon-owned retailer stores to Apple’s successful move into bricks-and-mortar retailing.

But for a variety of reasons, this seems like a long shot idea. Scott Devitt, an analyst at Stifel Nicolaus, says bluntly, “not a chance.”

“Investors that think of Amazon’s physical presence situation as being similar to Apple, miss what Amazon is about – removing friction via a one-to-one delivery infrastructure without capital intensive physical presence,” he asserted in a research note this morning.

Also, Amazon has no interest in owning a one-to-many delivery infrastructure with the incremental inventory burden involved. Finally, we do not believe Amazon has a core competency in areas of indirect, store-based retail such as site selection nor does it care to.

Borders today at market close is up 31 cents, or 4.51%, to $7.18. Amazon is up $3.02, or 3.97%, at $79.17.

Comments

[ng:]

Plus, Amazon customers would have to start paying sales tax in every state with a Borders store. As you say... not a chance.

2008 Jun 14 02:46 PM