dingojoe

Borders on the Verge of Bankruptcy

Borders UK is a totally separate company from the US Borders. The UK division was sold off two or three years ago. BGP certainly has it's own problems, but this article has nothing to do with BGP.

Borders Group, Inc. F1Q09 (Qtr End 05/02/09) Earnings Call Transcript

So, basically, nobody on Wall Street still covers BGP. That's kind of sad.

Why Is Bill Ackman Siding with Borders Group?

I don't think you have a very good grip on the facts here. Pershing holds about 11 million shares of BGP. They also have 14.7 million warrants at a price of $7.00/share. If they executed those warrants (and the odds of that seem pretty slim) they would then own about 31% of BGP as warrants are dilutive.

Pershing has also loaned BGP 42.5 million dollars last year that was initially due Jan 15th (today) and now has been extended to Feb 16th. Pershing obviously has been far more entangled with with BGP for some time now and in fact Ackman's investment in BKS may have been an attempt to influence BKS into buying out BGP. The Riggio brothers didn't bite and Ackman sold out of BKS, or perhaps, alternatively, Ackman needs the money and BKS could be sold for cash while BGP could only be sold for pennies.

Not sure why Ackman got into the book business in the first place since his involvement in retail stocks seems to be heavily focused on real estate plays. His ownership of SHLD (which he tired of) his TGT holding (which he pitch a real estate scheme to, which TGT has ignored) and his recent inexplicably foray into GGP (which he seems to think will provide equity to shareholders in BK because of the real estate) . Even his short term play on Longs Drugstore placed heavy emphasis on the CRE value. The bookstore play just doesn't fit into that. Maybe Ackman just likes to read.

Did Borders.com Results Lead to Barnes & Noble Chief's Exit?

I hope analyst do ask lots of questions, but BGP isn't very high profile and the questions asked last conference call weren't very probing, so don't hold your breath.

It's my understanding that the Borders website is now being used in store by employees to order books for the customer when the book is not in stock in the store (whereas previously it was done from the traditional in-store system). Furthermore, given that the new Borders business model involves fewer titles in-store that means greater reliance on whatever system of special ordering they are using. So, the question are, how much of the internet usage/ordering is store driven? and how much of it is replacing lost sales at the store level due to the decrease of titles carried in store?

I actually would have expected the conversion rate to be higher if Borders is utilizing the system in store to order for customers, but the rollout of the system to stores may have been staggered, so that may explain the big one month jump and why the conversion rate isn't higher.

Still don't like BGP or Sears/Kmart for that matter as they are all the poorest retailer in their respective segments. SHLD may have value once liquidated, but I just don't see any rabbitt for Borders to pull out of it's hat.

Borders to Sell Paperchase: A Good Short-Term Move

A Message From George Jones
Wed May 14 2008

"We are moving forward rapidly on our path to significantly reduce expenses. As you know, we've been working with an outside consulting firm to help us in this process and have an internal team that is focused on getting our expenses where they need to be to operate in this challenging economic environment, as well as properly position our company for the longer term.

To address payroll expenses, we have already put on hold or decided not to fill many open positions, such as the Chief Marketing Officer post. Today, I am announcing a next step that is a difficult, but necessary one. We have made the decision to eliminate several positions at the director and vice president level. The individuals impacted by this decision have been informed over the past few days and we are working with each of them on transition plans. They include: Susan Zewicke, VP, Seasonal Business, Airport, and Corporate Sales; Myles Romero, VP, Strategic Marketing and Entertainment Alliances; Julie Janusz, VP, Strategic Planning and Organizational Development; Beryl Needham, VP, Merchandising (Proprietary, Fiction, Diversity, and Bargain); Gordon Eiland, VP, Paperchase Strategy and Business Development; Susan Mann, Director, Benefits; Tom Dwyer, Director, Fiction and Proprietary; and Carey Wallace, Director, Internal Audit.

I'm sure you can understand that the decision to eliminate these positions was extremely tough, as these individuals have made significant contributions to our organization. I want to thank each of them for their hard work and dedication and wish them well going forward."

Ruthless turnaround or death-spiral? Always hard to tell.

Borders to Sell Paperchase: A Good Short-Term Move

I guess Borders needs the money to finish their new website. George Jones had said on the March 20th Earnings Call that it'd be rolled out by May 3rd, but it's still a no go. In fact, the company website hasn't worked at least since Friday (try going to bordersstores.com and getting investor information). Things seem to be dragging with the construction of their new concept store here in New Orleans too. October seems pretty unlikely. Granted these are little things, but they do add up.

I'm personally rooting for Blockbuster-Circuit City to buy Borders. Just think of the synergies!

Pershing Releases 13-F: Bulking Up on Sears, No Longer Short Ambac

Still think his Borders-B&N holdings are the most interesting. Does he really think he can maximize both investments, or does he think vulturizing one (BGP) can provide benefit to the other (BKS) that outweighs any stock loss on BGP.

Borders Keeps Us In Suspense

Ackman seems protected, not sure about the other stockholders. Pershing also owns 10% of B&N, and 10% of B&N is worth about $180 million while 25% of Borders is worth $90 million. Pershing has a put on the apparently most valuable asset Borders has, the AU-NZ stores and if things go awry it's a virtual guarantee that they get that asset as the 42.5 mil loan plus interest will be credited to that purchase. Ackman could lose alot on the Borders stock but still walk away with valuable pieces of Borders and a nice bounce on his B&N investment. Unless you can really figure out what Ackman is up to, and it's clearly beneficial to Borders future, stay away from Borders stock.