Slash Lane
Brian Marshall with Gleacher & Company said in a note to investors on Thursday that he doesn't think Barnes & Noble is a likely acquisition target for Apple and its $76 billion cash hoard.
In fact, if Apple's sole goal was to obtain brick-and-mortar locations, the company would have been better suited to purchase another bookseller, Borders, which has about 400 stores in liquidation.
Marshall said that Barnes & Noble's real estate footprint is "impressive," with more than 700 stores totaling 18.4 million square feet of space from an average store footprint of 26,000 square feet. But he also says a potential $1.5 billion vestment would not be a wise use of Apple's money.
Apple is currently making an aggressive push in the retail space, and plans to add 30 stores in the September 2011 quarter. Most of Apple's planned expansion, though, is set to take place internationally, and the vast majority of Barnes & Noble's retail space is in the U.S.
"We would much prefer to see AAPL use cash for strategic purposes and balance sheet optimization (e.g., acquisition of content rights, dividend initiation, share repurchases, etc.)," Marshall wrote.
The analysis came in response to a story published by Boy Genius Report earlier on Thursday, in which an "unproven source" claimed to have knowledge of negotiations between Apple and Barnes & Noble.
Charles Martin
Malcolm Owen
Andrew O'Hara
William Gallagher
32 Comments
Brian Marshall is correct that the obvious asset of Barnes and Noble that might be interesting to Apple would be retail space, but Apple have been very particular about the spaces they choose. It's not clear how many of Barnes and Noble's retail spaces would be of interest to Apple, but certainly some. However, buying a company just to obtain its retail leases doesn't make much sense to me. Apple would be immediately responsible for all of Barnes and Noble's retail spaces including those which Apple wouldn't want.
Another possibility is that Barnes and Noble might have some patents related to the Nook which might be of some value to Apple.
In either case or in both cases, I think it would be better for Apple to just buy what they want from Barnes and Noble rather than buy the whole company. Apple could buy all of Barnes and Noble's patent portfolio (assuming they have one) with the deal allowing B&N non-exclusive license rights. Similarly, Apple could take over selected leases.
Brian Marshall is correct that the obvious asset of Barnes and Noble that might be interesting to Apple would be retail space, but Apple have been very particular about the spaces they choose. It's not clear how many of Barnes and Noble's retail spaces would be of interest to Apple, but certainly some. However, buying a company just to obtain its retail leases doesn't make much sense to me. Apple would be immediately responsible for all of Barnes and Noble's retail spaces including those which Apple wouldn't want.
Another possibility is that Barnes and Noble might have some patents related to the Nook which might be of some value to Apple.
In either case or in both cases, I think it would be better for Apple to just buy what they want from Barnes and Noble rather than buy the whole company. Apple could buy all of Barnes and Noble's patent portfolio (assuming they have one) with the deal allowing B&N non-exclusive license rights. Similarly, Apple could take over selected leases.
If they owned property, the way McDonald's Corp. does, and they needed the equivalent locations and size lots for their stores I could see it being advantageous, but I don't any one of those three items are true.
Apple could buy all of Barnes and Noble's patent portfolio (assuming they have one) with the deal allowing B&N non-exclusive license rights. Similarly, Apple could take over selected leases.
What could be a good idea is to partner with Barnes and Nobles on the iBooks store.
BN already has a strong presence and relationships with all the publishers. They could drop the Nook and associated Apps and replace with iPads and iBooks .
That would be a great way for Apple to really compete with Amazon in the space.
What could be a good idea is to partner with Barnes and Nobles on the iBooks store.
BN already has a strong presence and relationships with all the publishers. They could drop the Nook and associated Apps and replace with iPads and iBooks .
That would be a great way for Apple to really compete with Amazon in the space.
Yeah I could see that being a reason for their discussions, but I don't think B&N would ditch the Nook since its outselling the Kindle now. Maybe we'll see a Nook App and iPads sold in B&N stores?
This rumor is one of the dumbest of the week.