Amazon is killing the competition for e-readers with Kindle, while Apple is reeling in the profits from its iPad. Where in all that is there room for another e-reader that can't do anything but act like an electronic library when the market for e-readers is largely settled?
Barnes and Noble gave it a go just the same.
And the man who thought he could catch some of that digital lightning in a Nook? He's fallen on his sword, metaphorically speaking.
William Lynch was brought in to the Number 2 book seller to work magic. He said he could invigorate the e-book division, get B&N.com on the cutting edge of technology and drive up sales. Given the time to prove himself, Mr. Lynch failed, and so he had to man up and accept the blame by quitting. He would surely have been let go if he had not done himself in.
That is what happens to CEOs who don't generate profits for the shareholders. In Mr. Lynch's case, his promises turned out to be false, as the corporation took a loss on the Nook end of the business. If not for profits generated through the bookstores, the whole corporation would have been dripping red ink.
It is not good business practice to suck one half of a firm dry to sustain the other. By accomplishing only that much, Mr. Lynch was not on the right track. He certainly wasn't positioning BN.com to be a leader in the market, which was supposed to be his strong suit.
What has stockholders worried is that there is no interim CEO in place, which leaves Barnes & Noble adrift. Majority stockholder Len Riggio has some plans about selling off a part here or there, but it is nothing concrete that a sound corporate policy can be built on. The book seller does not seem to have a direction at the moment, and until Mr. Riggio gives more guidance, it will sit there going nowhere.
B&N lost money on the grand schemes of William Lynch. Now he is gone, but whose grand schemes will chart the future course? Inquiring stockholders want to know.
And the sooner something solid is in place, the better. The market does not like stocks that are difficult to value when it can't be determined where the company is going in a year, or five years. Investors tend to assign a negative worth to shares that appear to growing more worthless by the day.
No comments:
Post a Comment