Wednesday, September 29, 2010

44% is the New 50%

In case you're not following me on Twitter, mes auteurs (and why wouldn't you be?), the results of the Barnes and Noble shareholder vote are in, with preliminary results indicating 44% supporting Riggio and 39% supporting Burkle. Quel fromage.

Riggio is looking to sell the company to other bidders, with books on the company going out to at least 20 interested parties this week. Burkle, who immediately called for a "transparent auction that delivers the best possible outcome for investors," is rumored to be considering a bid himself. If his is the highest, I'm not sure on what grounds Riggio would refuse (although I expect he will, given the bad blood resulting from the proxy war). For the time being, the incumenbent management and board members will remain.

Although this battle is more or less decided (pending certification of the final results over the next few days), the war is far from over. Shareholders will again vote in mid-November on whether to ratify the "poison pill" plan that prevents any shareholder, save Riggio, from accumulating more than a 20% stake in the company. Should the poison pill be significantly altered (say, in accordance with Burkle's proposal of increasing the trigger to 30%), we could see a whole new round of these shenanigans.

In my opinion, the 44/39 split, though close, might have resulted from a point raised by investor Howard Tannenbaum: "Riggio and his brother built up the company. What does Burkle know about book selling?" I ask you, meine Autoren: does it matter to you whether the head of the largest brick-and-mortar trade book retailer in the country knows anything about selling books?

13 comments:

  1. Yes, it really does matter. The book industry is really unlike other kinds of retail. The whole purchasing structure is different, the margin is wildly different, returns are unheard of in non-media retail, and it really takes not just a lot of getting used to, but some things just won't ever make sense to someone who used to run Del Monte Fruit or Kohl's. I have worked at many book companies (bookstores, wholesalers, publishers) and trust me, there's a world of difference when the guy at the top "gets it". When he/she doesn't, there's a lot of frustration, a lot of traveling down dead-ends, pursuing angles long-known to be fruitless, and so on. Sure, new ideas and new people are always appreciated in the business, but there is a lot to be said to have the helmer of a huge company like B&N actually know what he/she is doing.

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  2. Even my limited knowledge of business doesn't keep me from thinking knowing about the industry is a necessity. As Carin above said, books are unlike other types of retail. Reserves alone are a pretty unique thing to deal with. Good business sense is universal, but it's important to know the specifics of this sector as well.

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  3. Just out of curiosity, you do realize you said "What Cheese!" in French, right?

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  4. Thanks for the translation, TJ;) Some of us never learned French and are too lazy to look it up. Now I just want to know what "mes auteurs" means:)

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  5. My authors, Kelly. Same with meine Autoren.

    And to answer Eric's question, yes it matters, for all the reasons stated above.

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  6. I don't think it makes that much of a difference IF he keeps the same body of corporate officers AND he hires someone really really smart to show him the ropes. As long as he's got good people behind him I don't see why it would make that much of a difference. Unless he's totally rad and changes everything.

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  7. Hi T.J.,

    Yes. When learning French, my friends and I would substitute it for "quel dommage" ("that's too bad"). "Quel fromage" ended up being more or less equivalent to "oh, là là" ("oh, man").

    Haha and thanks, Schadenfreude. Your comment really ties the post together.


    E

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  8. I think it does, yes. I question the presumption that he doesn't know how to sell books just because he didn't start his own bookstore. This would limit the number of CEOs qualified for their positions to...two.

    It certainly limits who would be considered an acceptable buyer for the company. And his last name rhymes with Smezos.

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  9. I'm more interested in whether or not he reads books.

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  10. Have you looked at Sony lately? They were the bright innovators in electronics. Then they put some schmuck without the slightest knowledge of tech at the helm and it's been downhill ever since.

    The IT industry also suffers badly from managers with no knowledge, and active resistance to, high tech. Don't be us. B&N needs someone who knows books.

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  11. Two of the most successful book sellers are Amazon and Wal Mart, neither care as much about the book business as they do about the retail business.

    Even when discussing publishing, it is more important that those who run the company (management) know about books than the owner. The owner's job is to find the best people to run the company and supply enough money for it to succeed.

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