bookseller analyst

Initial Thoughts on Borders Q3 Results

Mr. Sullivan, please look more deeply into Borders financials before you proclaim anything. Borders has decreased their inventories by 25%--that is how they have paid down their debt. Books are essentially bought on consignment and can be returned for full credit less shipping costs. Borders has drastically cut its CD and DVD stock and has made deep cuts in its book backstock.

It has also made extreme cuts in payroll hours and employee benefits which may have contributed to better cashflow.

All these tactics have led to lower traffic, poor sales and a dull future. Bookstores cannot survive without adequate inventory. If you measure the average Borders to the average B&N you will see empty Borders stores.

Borders turnaround has nothing to do with the current climate. Since George Jones took over as CEO the company has spiraled downward abandoning strategies and falling into the discount war trap. This is a death knell--where is Crown Books now?

Borders tried to sell itself for almost a year with no apparent tire kickers. Now its market value is pathetic. On inventory and assets alone its market cap is a value.