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barnesandnoble.com: Trying to Come Up with a Happy Ending

barnesandnoble.com (BNBN) is like a good book with a bad cover. A name like "barnesandnoble.com" just doesn't have a cool, Net sound to it.

However, when looking at the company, there is lots of substance. Eventually, investors will catch-on and so will the stock.

The stock has been, well, lackluster. The current price is 18-5/16. The high was 26-5/8.

Here's a list of other e-tailers and there valuation metrics:



Ann. Revenues

Market Cap


(in millions)

(in billions)


 $   18.94

 $           112.30

 $         2.70


 $   62.56

 $        1,000.00

 $        21.00


 $   60.75

 $          & nbsp;  30.00

 $          6.90

Value America

 $   12.06

 $          & nbsp;  42.00

 $         0.53


 $    9.25

 $          & nbsp;  13.00

 $         0.23


 $   15.00

 $           221.00

 $          0.65

A big reason for the steep valuation relative to Amazon.com is that barnesandnoble.com has been playing a game of catch-up -- which, historically, has been a deadly game (especially when played against Amazon.com).

But, the fact is that the macro Net trends look to be in favor of barnesandnoble.com. In other words, the millions and millions of new Net users are not particularly Net savvy.

So while the barnesandnoble.com brand may not have been attractive to early adopters, it may be attractive to the new entrants on the Web, who still feel much more comfortable shopping in stores. In fact, their introduction to the online world will likely be found by going, say, to a Barnes & Noble store on a street corner.

Actually, barnesandnoble.com has a great advantage: one of its major investors is a brick-and-mortar company -- that is, Barnes & Noble. In all, Barnes & Noble has over 1,000 stores (which also include B. Dalton stores). What's more, Barnes & Noble has the most extensive book inventory system, with 750,000 in-stock titles. Then there are the catalogs and databases.

The other major investor is the global media giant Bertelsmann, which owns Bantam Doubleday Dell, Random House and BMG Entertainment.

While it still has much to do to reach Amazon.com, barnesandnoble.com has been aggressive in getting customers. In the past quarter, the company added 500,000 customers, putting the grand total to 2.2 million. The site gets about 4.8 million unique visitors (this compares to 11.5 million for Amazon.com), making it the fifth largest shopping site.

These results are showing up on the financials. In its latest quarter, the company reported a loss of $22 million, which compares to $23.7 million in the same time last year. As for revenues, these tripled to $39.1 million.

Also, barnesandnoble.com has $625 million in the bank. There is no debt.

Interestingly enough, the executives of barnesandnoble.com have bought large amounts of shares. This is typically a bullish sign. For example, the Chairman of barnesandnoble.com, Leonard Riggio, bought 2.3 million shares.

Look at Amazon.com. It seems that every week, there is a new executive leaving the company -- so as to retire and enjoy their riches. As for barnesandnoble.com, they are, ironically enough, the "underdog."

They are motivated and they want to win.

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