Barnes & Noble, Inc. (BKS): Betting on America’s Biggest Bookseller

Competition is eating the Nook alive. In my eyes Microsoft is trying so save a ship that so obviously seems like it should be abandoned. The only reason I could think of is the college bookstores, they provide Microsoft with invaluable access to a highly educated crowd of young people.

What Barnes does best

Without a doubt I would absolutely love to, through the purchase of common stock, become an owner in the Barnes & Noble stores that I have had the good fortune of visiting. Barnes and Noble’s filings on EDGAR tell me that while the retail segment’s revenues have not been going much of anywhere, margins are on the rise. See for yourself:

All right, here’s a segment that’s not so bad after all! 2013 revenues seem a bit low but remember there is one quarter of Barnes and Noble’s fiscal 2013 that has yet to be reported. Margins collapsed over two percent between 2010 and 2011, but have been trending upward ever since. Barnes and Noble is pretty darn good at doing what they do best, and that happens to be peddling books.

Final Foolish Thoughts

I think Barnes and Noble would be an excellent company, if only it weren’t for that awful Nook division! While Barnes and Noble is spinning off the Nook and its college bookstores, it is maintaining majority ownership of this new entity.

With a degree of disappointment I have come to the decision that I don’t want to own Barnes and Noble as long as they own a substantial amount of Nook Media LLC. The college bookstores seem like a decent asset, but trying to complete with Amazon in the e-reader business is asking to get your butt kicked.

It is with a heavy heart that I have to reject Barnes and Noble. I love the experience of being in one of their retail stores. If I could purchase just the retail business for a reasonable price, which the $950 million dollar market cap of B&N certainly is, I would do so in a heartbeat. But until Barnes and Noble makes doing what it does best its only focus, I’m staying far far away.

Fool blogger Ryan Palmer has no positions in any of the stocks mentioned. The Motley Fool owns shares of Microsoft.

The article Betting on America’s Biggest Bookseller originally appeared on Fool.com and is written by Ryan Palmer.

Ryan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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