Will Barnes & Noble Recover?

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With shares of Barnes & Noble (NYSE:BKS) trading around $16, is BKS an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Barnes & Noble is a content, commerce, and technology book-selling company that provides customers access to books, magazines, newspapers, and other content across its multichannel distribution platform. The company operates 1,338 bookstores in 50 states, 647 bookstores on college campuses, and one e-commerce site. It also develops digital content products and software. Barnes & Noble operates in three segments: B&N Retail, B&N College, and Nook.

Barnes & Noble’s move this week to lay off a number of engineering staff supporting its struggling Nook e-reader is stirring speculation about the company’s plans for the device. A report Monday from Business Insider said the company fired its Nook hardware engineers, but Barnes & Noble said that was not accurate. Although the retailer did not specify the number of cuts, fewer than 100 people lost their jobs, the New York Times reported.

Still, the move cast further doubt on the future for Nook, the e-reader that the company has invested hundreds of millions dollars in to promote as a rival to Amazon’s (NASDAQ:AMZN) Kindle and Apple’s (NASDAQ:AAPL) iPad. After news of the layoffs surfaced, Barnes & Noble sought to tamp down talk about its commitment to Nook by expressing confidence in the unit’s management. “As we’ve aligned Nook’s cost structure with business realities, staffing levels in certain areas of our organization have changed, leading to some job eliminations,” said spokesperson Mary Ellen Keating in an emailed statement. “We believe we have a strong management team in place at Nook, having recruited significant new talent.”

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