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Peter Larson
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A humble engineer and family man. Never been to Wall Street. Not psychic or anything. The idea behind DCFHub: I realized one day that it is possible to automatically calculate and track a net present value for just about every stock by simply plugging the analyst consensus growth estimates into... More
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  • A Quick Barnes And Noble Update 0 comments
    Sep 5, 2012 1:56 PM | about stocks: BKS

    A couple follow-ups to my Barnes and Noble recommendation from this article.

    1. Judge Cote has asked for all final amicus brief filings to be handed in today. A judgement in the case could come today or tomorrow.

    2. I am working on an article explaining this, but I believe the nook may have a significant and tangible cost advantage over the Kindle, and all other tablets, due to a little known supply chain management feat. For this reason, Amazon may not be able to match Nook prices on an apples-to-apples basis tomorrow.

    3. Apple and the publishers have agreed to ditch the agency model in Europe for 2 years. In Europe, the agency model is good for Barnes and Noble as they have no existing paper book business to disrupt, but will need to offer below market ebook prices in order to make anyone care. They may elect to price their ereader hardware slightly higher in new markets to make up the difference. If Europe is on the wholesale model and America is still on the agency model we may have a very interesting ebook market.

    4. Simon A. Walker, the head of the nook app program, has announced on Twitter he has a new developer relations job starting on September 7th with an "international brand... more to follow". This could simply mean that Amazon has picked him off OR it could be a veiled reference to the Newco spinoff being completed on that date OR it could indicate that Barnes and Noble is ditching android for windows and is about to make that announcement soon.

    The upshot of all of this is that the next two days will be very interesting for BKS. I would NOT recommend closing the position.

    Instead, an options straddle may be appropriate.

    As for me, I'm just going to stick with a long position, but I have a lot of long-term confidence in the company.

    Disclosure: I am long BKS.

    Additional disclosure: I am short AMZN

    Stocks: BKS
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