"Barnesandnoble.com to go public" CNET NEWS.COM |
Barnes & Noble, the world's largest
brick-and-mortar bookseller, today announced
plans to spin-off its online unit in an initial public
Investors cheered the
news, pushing the
company's stock to a 12
percent gain in early
trading, to 41.6875, up
from its close of 37.25
had been a drag on
earnings for the
bookstore giant, and had
been clouding its financial picture by creating
confusion about the true value of the company's
online operations and its core retail book business,
"Part of the rationalization was to give investors
greater clarity on the start-up spending for its
Internet operations and the earnings from its core
business," said Danielle Fox, an analyst with J.P
Morgan Securities. "The company will now get a
more accurate valuation."
Barnes & Noble said it plans to file a registration
statement with the Securities and Exchange
Commission within the next 30 days for an initial
public offering of barnesandnoble.com stock. The
bookseller noted that the registration is subject to
market conditions, however. The company plans to
sell up to 20 percent of barnesandnoble.com's
stock to the public.
Analysts were in agreement that the IPO plan is a
good move for Barnes & Noble.
Gary Balter, an analyst with Donaldson, Lufkin &
Jenrette, said the capital barnesandnoble.com will
raise in its IPO will help it better compete with
Last year Amazon.com raised $54 million with its
IPO, when it sold 3 million shares at a target price
of $18 a share.
Balter said he doubts that other major players, like
Borders Books and Music, will follow suit with
IPO plans for their Internet operations.
"Borders feels it has an international, domestic, and
Internet strategy, and plans to keep it as one," he
Like Amazon.com, barnesandnoble.com has yet to
generate a profit.
While Barnes & Noble's brick-and-mortar
business posted improved profits for the second
quarter of $7.9 million, the company's online unit
had a net loss of $13.6 million. That loss brought
down the company's overall performance, resulting
in a widened net loss for the quarter of $5.7 million,
compared with a loss of $1.4 million reported a
Barnes & Noble, which reported its second quarter
results today, noted barnesandnoble.com generated
revenues of $12.5 million for the second quarter
ending August 1, compared to $2.2 million for the
same year-ago quarter.
Barnes & Noble added that its online unit had more
than 720,000 customers in 175 countries as of
August 1, an increase of 44 percent from 500,000
customers in 158 countries as of May 2, 1998. The
site's "Affiliate Network'' grew to more than
17,000 sites and includes strategic partnerships
with many of the top 20 Web sites, including Lycos
as well as an exclusive relationship with America
Online's proprietary online services.
Barnes & Noble announced its IPO plan in its
second quarter earning report.