Audition: A Memoir

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Quarterly Report: The Merger Question

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As we have every quarter for the last several, we’re looking at Barnes & Noble’s recent quarterly report to gauge the trends that are impacting the book industry – which books were big over the last few months and what’s expected for the months ahead.This quarter has been rather dramatic for the big chains. In March, Borders took an emergency cash infusion (with many strings attached) from a large hedge fund shareholder just to stay afloat. This came on the heels of a new strategy initiative from the chain, which we dubbed “The Froot Loop Gambit,” leading to some great discussion and a follow-up post about “knowledge products.” Two months on, Borders is out of the woods for the short term, but appears unlikely to survive as a standalone company in the long term. Right now, most are speculating that Borders will be swallowed up by Barnes and Noble.As such, our regular look at Barnes and Noble quarterly updates may offer an even broader view of the book industry as soon as next quarter. Interesting times. In the meantime, what follows are insights gleaned from Barnes and Noble CEO Steve Riggio’s comments on the quarterly conference call for the quarter ended May 5th. (Transcript provided by Seeking Alpha.) Interestingly, this quarter was much lighter on the discussion of individual books that have done well recently or that are expected to do well in current and future quarters. It’s hard to know what to make of this change in tone other than the fact that there appears to be paucity of blockbusters this year compared to the Potter-mania, political memoirs, and self-help tomes that fueled sales in 2007.First quarter numbers compared unfavorably to a year ago when Oprah-backed positive thinking pablum The Secret was a massive seller.Looking ahead, the second quarter will face very tough comparisons to Q2 2007 thanks to the huge sales of Harry Potter a year ago. “the quarter should end with some excitement with the publication of Breaking Dawn by Stephanie Meyer and we think that’s the most anticipated book of this year, if not actually in a couple of years. Even though it’s a teen book, it has wide appeal.”April was difficult but May started out better: “We had a number of big books in the first couple weeks, including Barbara Walters’ Audition, the Stephanie Meyer adult fiction book The Host and the continued strength of the Last Lecture.”As for Riggio’s answer to the Borders question: “We’ve put together a team of senior management people and financial advisors to study the feasibility of a transaction with Borders. We’ll provide no further comments about any discussions we may or may not have.”

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