If you love books, the news that Borders is close to filing for bankruptcy protection is a mixed blessing.
On one hand, the fact that Borders is heading toward bankruptcy is a signal that something is wrong, that something is “broken with their business,” as the Wall Street Journal reports. But on the other hand, the bankruptcy process should offer Borders the chance to get itself solvent again and help it to survive.
As the WSJ story notes, bankruptcy can help Borders do the following things:
- Repay money it owes
- Terminate leases on store locations
- Restructure its contracts
On the flip side, Borders stock has been declining – it’s now at 26 cents a share – on the news that bankruptcy is imminent.
One wonders whether its stock price is so low for other reasons as well: the fact that brick-and-mortar retail booksellers are competing with Amazon.com for market share. In addition to dominating in online sales of books made of glue and paper, Amazon is fueling the e-book revolution through its Kindle electronic reading device. On the Kindle and similar e-readers, books are downloaded straight to the device and stored in onboard memory or online.
And as the WSJ reports, experts consider Borders to be a weaker version of well-known brick-and-mortar retailer Barnes & Noble – which, incidentally, also makes the Nook e-reader.
Source: Wall Street Journal, Borders Nearing Bankruptcy: What’s Next?, Shira Ovide, February 11, 2011