I don't think Barnes & Noble is out of the woods yet. While the company has certainly fared better than Borders, the company is going to face a difficult road going forward.
First, the company is still heavily dependent on its brick and mortar retail operations, but the demand for physical media (including books) is declining rapidly. Second, the company's future depends on its ability to transform itself into a digital distributor of content. In digital distribution, B&N must contend with Amazon, Apple, Google, and others (e.g., Sony). These competitors have significant advantages in the areas of economies scale and scope and technology.
Borders bankruptcy will give B&N some reprieve, allowing the company to direct cash flow from its bricks & mortar operations to its developing digital strategy (e.g., BN.com, Nook). Nevertheless, I think B&N will face a rocky future. Investors seem to agree, with B&N trading at close to a 5-year low.
I think the key difference between B&N and Borders is that BN actually had a digital strategy long before Borders ever did. According to this article they were already dabbling with ebook delivery in 2001:
Right now though, I think one of the best things is they have the cheapest Honeycomb capable tablet in the Nook Color (with some hacking). The screen is IPS and the processor is a 800Mhz A8 ARM, capable of overclocking to 1100Mhz. It's effectively a scaled down IPad in terms of processing/screen. From a hacking perspective it's more interesting than anything Amazon has shown.
I think the real problem is that Borders is trying to pivot on a dime. They saw the .com implosion and assumed the digital revolution was hot air leaving their position unassailable.
First, the company is still heavily dependent on its brick and mortar retail operations, but the demand for physical media (including books) is declining rapidly. Second, the company's future depends on its ability to transform itself into a digital distributor of content. In digital distribution, B&N must contend with Amazon, Apple, Google, and others (e.g., Sony). These competitors have significant advantages in the areas of economies scale and scope and technology.
Borders bankruptcy will give B&N some reprieve, allowing the company to direct cash flow from its bricks & mortar operations to its developing digital strategy (e.g., BN.com, Nook). Nevertheless, I think B&N will face a rocky future. Investors seem to agree, with B&N trading at close to a 5-year low.