Borders Bankruptcy A 'Low-Probability Event'?

Borders stock prices rose significantly on Tuesday evening when major investor Bill Ackman declared on CNBC that the company's bankruptcy was a "low-probability event." Soon after the statement, Borders stock rose 37%.

The statement was a surprise to many who have believed that the bookstore chain has been heading towards bankruptcy for a long time. Just days earlier, the Wall Street Journal notes, Borders announced a major series of layoffs, just the most recent in a particularly bad year for the company.

Just weeks ago, Borders CEO Ron Marshall resigned, after working with the company for only one year. Marshall's resignation led many to wonder if the company was headed towards bankruptcy. Stock shares have been lower than ever over the past year, and the bookstore had a "disappointing" holiday season, according to Marshall.

So are things really looking up for Borders? Or was Ackman's statement a last-ditch effort to boost stock prices, as the New York Post suggests? The Post quotes analyst Michael Souers, who says that the statement should be taken with "a grain of salt," because, perhaps, "the financier is looking to salvage his big position in the shares."

Comments

[klondiker]

06:35 PM on 02/07/2010

They have already closed down here their stores here in the UK, so I wouldn't be too sure.

[jukesgrrl]

05:08 PM on 02/06/2010

I much prefer Borders to B&N. I shop there almost exclusively. Their membership card is FREE, not $25 a year as B&N's is.

[FashionPho]

11:42 AM on 02/06/2010

The chain stores, they came, they conquered, they put independent stores out of business, now one of them is going bankrupt... Bring back the independent stores in America, along with some independent spirit. Support bookstores run by local people.

[jukesgrrl]

05:17 PM on 02/06/2010

If you still have local bookstores to shop in where you live, more power to you. I went that route as long as I could, but I didn't buy enough to support my own store. When I buy online, however, I use Powell's since they are staff-owned. And for my personal reading, I buy a lot of used books from a locally owned shop and, of course, I patronize my public library. It's very unlikely that small, neighborhood bookstores will ever make a come-back.

[FashionPho]

07:55 PM on 02/06/2010

Powells, have not heard of them. Staff owned that is great, will check them out. Thanks for that info.

[rdiaz921]

10:54 AM on 02/06/2010

I love Borders! and yes I love getting the coupons! I've bought 4 books recently and haven't had a chance to read them yet. LOL

I hope they don't fail. :(

[paliuli]

09:02 AM on 02/05/2010

Borders used to be a meeting place in town, then they removed all the chairs in the store. Then they closed the cafe, and put in Starbucks. Then the variety of books declined, so it was faster to order from Amazon.

[jukesgrrl]

05:09 PM on 02/06/2010

Mine still has lots of chairs and Seattle's Best coffee. I did almost all my holiday shopping there.

[Tim Janssen]

09:52 PM on 02/04/2010

Being an Ann Arborite and having watched Borders over the years I have my doubts that they will survive beyond the current year. They've made a lot of dumb moves over the last 15 years. Inept management has been a real problem and they don't have a true competitor to Kindle which at least Barnes and Noble have. I give them a 50/50 chance to survive into 2011.

[Reilly Diefenbach]

09:28 PM on 02/04/2010

Who can afford a twenty five dollar book any more?

[Deanie]

12:02 AM on 02/05/2010

Actually, anyone who gets regular emails from Borders could possibly spring for a $25 book. Practically every week, I receive emails containing a coupon worth 30% or 33% off—which, of course, may be one of the reasons why Borders is experiencing financial challenges.

[Pucker]

04:34 AM on 02/05/2010

Yep, I sort of feel guilty for for many times I've found a new book at the store, and just went home to order it.

The other blow is going to be the E-Readers. They will insure the death of the book store as we know it. They will improve on the impulse buy - the one thing Borders & B&N have over Amazon right now.

It's amazing how fast things change. Not so long ago there were people complaining about how the soulless supermarket book stores were driving out the independents. Now it's the big book stores that look like relics from the past.

[Jennifer Astle]

06:08 PM on 02/04/2010

Happy to see stock prices rise. I'd love to see a grass roots effort on the parts of small investors ($1.30 a share is nothing, really), who want to see important companies offering important resources like books stay alive.

Meanwhile other chains like Walmart slash prices so low by importing goods from developing nations that other companies struggle to compete.

[Liberal2]

04:13 PM on 02/04/2010

I guess it's going to take the loss of all social institutions (like bookstores) for people to realize how empty a purely Internet-dependent life can get.

[TimeIsLife]

04:22 PM on 02/04/2010

I'm in total agreement with you. I am scared of the future as many of my young friends spend their days in front of their computers at work and then come home and spend hours more in front of their screens. Read a book? Meet up for dinner? Go for a walk for no reason? Nope. Human interaction and physical movement is on a sharp decline and it's only getting worse.

[abliss2379]

05:22 PM on 02/08/2010

Agreed--I have ordered books from Amazon, but honestly, that's when I knew what I wanted. When I don't know what I want, or just want to browse, I need a brick and mortar store. Browsing on a computer is not all that comfortable.