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Apple Considering Barnes & Noble Acquisition?

Popeye206 said:
+1

Make NO SENSE! It would be the worst purchase ever!

Hummmm.... maybe Balmer should take a look at it? :p
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Actually... you inadvertently bring up a good point.

Remember the story a few months back about Apple losing Admob to Google? And how after that, they gave companies they were looking to acquire only a few hours to accept, in order to prevent losing the company to Google? If Apple themselves spread rumors about purchases like this, maybe they can get Google to actually make the purchase. If they pull this off successfully enough times, they can have Google spend itself out of business, and there goes Apple's biggest competitor :D
 
Terry W said:
Business 201: don't buy something that's LESS profitable than you are unless you also want to be less profitable... :rolleyes:
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And Business 202: Only buy something if when added to your core business it and your core business will be more profitable than they would be alone.

Seriously. You don't just buy a diamond mine because it is making a profit and you have the cash. The diamond mine will be priced at its current value. You buy a diamond mine if you uniquely can improve that mine's value, or if owning that diamond mine enhances the value of your existing core businesses.

Business 203: Remember opportunity costs. If you spend your time and attention getting another 2% profit from that diamond mine rather than inventing the next iPad/iPhone/iPod/iMac/Apple 2 with 1,000% profit, you are a fool.
 
Trauma1 said:
No, that is incorrect.

Off the top of my head I can think of about a dozen examples where that is not true, with many more if I actually cared to look it up.
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Unless you want to just convince your own head that you are right, perhaps you might want to share a sampling of those "dozen examples" where buying a less profitable business just because it was making a profit was a good idea?

Note that your original statement said nothing about business synergies, so please keep your examples to unrelated businesses.
 
xkmxkmxlmx said:
"plus another 600 college bookstores"

That right there would be kind of interesting. "Apple Retail Store Mini" for all your late night no doze induced spontaneous Mac purchases.
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College Apple Stores could be the reason ... Not sure if B&N makes money on it's own? ... if they do ... this is a good way to open 600 stores overnight with key Apple customers already in the store. :cool:
 
jettredmont said:
Unless you want to just convince your own head that you are right, perhaps you might want to share a sampling of those "dozen examples" where buying a less profitable business just because it was making a profit was a good idea?

Note that your original statement said nothing about business synergies, so please keep your examples to unrelated businesses.
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Read my previous post.
 
iPadPublisher said:
Exactly. And they would have done it for the real estate only.

There is one company that bought like 12-13 of the Borders locations to expand their own bookselling operation. Apple could have done the same thing if there were looking for some more retail spots.
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Why would Apple buy all of Barnes and Noble just to get its short-term leases on real estate? $1B seems like a lot if all you want to do is take over some leases ...
 
Apple does it all for the Nook?

More like Barnes and Noble wants to be acquired before they meet the same fate as Borders.
Apple could use their real estate to strategically expand the base of Apple Stores and their online properties and deals with publishers to get into the book and text book game, so there may be something to this.
 
Trauma1 said:
Cigarettes and mac 'n cheese, airplane engines and televison networks, and a cable company and hotel rooms.

All of those have widely incompatible business strategies, more so than a retail computer company and a retail bookstore.
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Cigs and Mac&Cheese: these are general convenience / grocery goods. They share a distribution channel. They are mature industries where distribution channel improvements and consolidation is key to profit growth.

Airplane engines and TV networks: didn't end up terribly well for GE. GE has "general" in its name, and being the "anything/everything" company is its core mission statement.

Cable co & hotel rooms? You got me there. I'm not sure what cable co you are talking about. Can't see a good business reason for a cable company expanding into hotel rooms unless it had already hit a wall in its core-business growth.

You don't just buy a business because it is making a profit and you have money. That profit is already figured into the price the company is willing to sell for (or the price others are willing to pay for it). You buy a business when you have the money to do so, and doing so will increase the business's profits and/or your own. They used to call that "synergy" before it became an overused buzzword.

If your business if aggressively swooping in when business vs market cap are out of line, that's one thing: then it makes sense to act as a holding company and then sell the held company at a profit later on. But that's not Apple. Their core competency is consumer electronics and computer systems. They are not stock market arbitrage specialists.
 
wizard said:
First the vacancy rate isn't 10% every where. Some B&N locations are very high value.

Second If you are looking to do rapid expansion of retail space, moving into quality real estate is sometimes faster than finding other suitable locations. One of the local B&N stores is almost optimal for Apple, great location, nice building and big.
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But, are there more effective and less expensive ways to get those real estate leases than buying a billion-dollar+ company?

I think so. In the kind of retail market we have today, absolutely.
 
Not sure why you're singling out my posts as we're basically making the same argument. As others have pointed out, there is a rather naive notion in this thread that just because two companies sell different products it is "senseless" for a merger/acquisition. I am arguing, as you are also pointing out, there is much more strategy and management involved than what the companies are at face value. I'm doing it in fewer words because I'd rather not waste time explaining these concepts in great detail to those who refuse to understand/don't care, not to mention that it's beyond the scope of the Macrumors website.

But...

jettredmont said:
Cigs and Mac&Cheese: these are general convenience / grocery goods. They share a distribution channel. They are mature industries where distribution channel improvements and consolidation is key to profit growth.
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No. Cigarettes have additional barriers to entry (age limit, tobacco licenses, Surgeon General's warning), not to mention the taxes and legislations attached to them. Yes, mac n' cheese can hazardous to one's health so I'll leave that debate aside.

jettredmont said:
Airplane engines and TV networks: didn't end up terribly well for GE.
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But it did happen and did work. That's all I was saying.

jettredmont said:
You buy a business when you have the money to do so, and doing so will increase the business's profits and/or your own.
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Again, I'm making the exact same argument in less words.
 
If anything I would bet a partnership might be arranged. Perhaps sell whatever future tablets and laptops Apple comes up with in B&N's that are nearby college campuses. Education discounts and sold only to students.
 
I have this funny feeling that these rumors are started by a B&N shareholders to bump up there falling stock price.
 
Apple would purchase Barnes and Nobles just to get rid of it.
Purchase it and throw it away :")
 
Books are dead. BN stayed alive because of the nook. Books a Million is alive because it's a discounter. Apple wants no part of selling physical books.

However, this rumor is far-fetched enough that there's got to be a grain of truth to it somewhere. Perhaps partnering with them to sell the iPad to replace the nook? But that just doesn't seem likely. I'm not sure BN would throw the Nook R&D out the door like that.

And why is this on the front page?
 
MacRumors said:
It's unclear what Apple would gain from such a purchase. B&N has more than 700 stores plus another 600 college bookstores, as well as decent digital penetration with its own eBookstore and Nook e-reader.

...

We're a little skeptical about the whole thing and mention it primarily to encourage conversation. If Apple really wanted to purchase a bookseller, it could have bought Borders at fire sale prices.
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How is it at all unclear? On one hand, they probably gain some bargaining power over book publishers. On the other hand, unlike Borders, Barnes and Nobles has many college locations. Want to sell more Macs on college campuses? Convert part of every B&N into an Apple Store.

I don't really get why Macrumors thinks Apple was interested in just any book store....
 
Unlikely

Sounds rather unlikely for several reasons.
  1. Apple likes to cherry pick its locations to guarantee ROI. *
  2. Simultaneous renovation of hundreds of stores is major undertaking. (None have glass staircases or are in the shape of cubes.)*
  3. Apple has already stated how many stores it plans to open this year -- a significant number, though not in the hundreds. **
  4. If retail locations are not ideal and there are no tangible assets like a patent portfolio or coveted technology, there is no real value.
  5. For a smooth transition with minimal job loss, Apple would need to keep most of the stores open during makeover.
  6. Too fast too soon. Each location would need to have sufficient inventory and trained personnel unless the model changes where they are more like loss-leading hangouts to read with a Genius Bar rather than typical retail stores.
  7. As stated, the Borders acquisition of of 399 locations (or some part thereof) in July would have been a better bargain.

* A wholesale acquisition of so many locations would likely see the buyer selecting only the worthy locations while subleasing the undesirable. Until lessees are obtained, the unproductive leases would be a drain on the profits. This could have a detrimental effect results of brick-and-mortar store profits for several quarters.

** Apple set to open a new retail store every 50 hours on average thru September 25, 2011
 
rdowns said:
Do you really think Apple, no matter how much cash they are sitting on, is looking to triple their store base in one fell swoop? Stores on college campuses also make no sense, the volume isn't there and every product sold would be with an educational discount. This makes zero sense.
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This is all kinds of wrong.

"One fell swoop"? Where is this exaggerated view coming from? They can pretty easily have a say over making an Apple computer section in college stores, which would be much easier to do than popping up a new Apple store next to a B&N, fully staffed, etc. You seem to think it's expensive and impossible, but in reality it's just the opposite precisely if you're trying to get a bigger presence on college campuses.

Which would be huge. The volume is definitely there. Where have you been? There are tons of switchers and probably a lot of future switchers, percentage-wise, probably more so than any other demographic.

The educational discount would easily be made up for, and honestly, a kid who cares about the discount buying it from 5th Ave. vs. on campus is no different.

I think pretty much everything you said would be valid if it was based on some more reflection and said exactly the opposite.
 
FrankieTDouglas said:
Please, no! If Apple bought Adobe, they would just **** up their software like what Apple does with every other professional software they try to "update."
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Uh, Adobe isn't exactly the worlds best software development house: Tons of feature bloat, no bug fixes. :(

KnightWRX said:
I find it funny how everyone is wanting Apps on their AppleTV... when Google did it first :
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Do you know how utterly awesome that is for all twelve Google TV users?
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Apple is a hardware company, Their media initiatives exist to promote and sell hardware. Thus, zero chance they would be interested.

Not that BN is necessarily for sale anyway.
 
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