Borders Group has filed for Chapter 11 bankruptcy, and plans to close about 200 of its stores and reduce its staff, the book retailer said Wednesday.
"It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor related parties, and the company's lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor," the company said in a statement.
Email Print "As we do close down the stores, ultimately there will be a reduction in employees," said Borders spokesman Donald Cutler. But he didn't say how many workers would lose their jobs.
Borders currently has 659 stores and employs nearly 20,000 workers, including 5,842 full-time employees, both regular and temporary, and 13,661 part-time employees, said Cutler...
Borders in bankruptcy, will close about 200 stores
Aaron Smith
February 16, 2011
http://money.cnn.com/2011/02/16/news/companies/borders_bankruptcy
Showing posts with label Borders. Show all posts
Showing posts with label Borders. Show all posts
Wednesday, February 23, 2011
Wednesday, February 9, 2011
10 American Companies That Will Disappear in 2011
Here's a list from DailyFinance.com:
Saab USA
Saab has tried to create a renaissance of sorts. The company was sold to Netherlands specialty carmaker Spyker last year. Spyker took an awful risk, particularly in the U.S. -- because Saab is one of the few car firms that did recover when the U.S. car market expanded last year. The total number of cars and light vehicles sold in America in 2010 was up 11% to 11.6 million.
Sales of some niche brands surged. Porsche sales in the U.S. were up 29% to over 29,000. Audi sales rose 22% to over 101,000. But Saab sales collapsed -- falling 37% to 5,445. American car companies have also created new lines of vehicles that have begun to sell well, particularly in the middle market where Saab operates. The Japanese still control the lower-price, high-quality portion of the market. And Korea's Hyundai took share from nearly everyone else last year, as its sales rose over 24% to just above 538,000. There's no room in the American market for tiny operator like Saab.
Office Depot
The company is running third in a three-horse race with Office Max and Staples. Office Depot also has to compete with small business centers in Sam's Clubs and Costcos. The firm operates on razor-thin margins, while managing 1,150 locations -- which are very costly due to employee and real estate expenses. Office Depot is a strong candidate to be taken over by one of its rivals or a broader retail chain like Target.
The market is too competitive for Office Depot to stand on its own. A consolidation in the sector would allow a merged operation to cut thousands of people and close hundreds of locations. Operating margins, then, would not be so modest.
Dean Foods
The maker of dairy products like Land O'Lakes and Silk has struggled as much as any other large public company this year. The costs of raw milk, butterfat, soybeans and sugar have risen sharply. Dean Foods has also been crippled by debt. The firm's shares were down as much as 60% at one point during the last 12 months.
Despite all the bad news, hedge fund investor David Tepper bought a 7.35% stake in the company. Dean Foods shares rose 9% after the announcement. Dean has already sold its yogurt business to Schreiber Foods. And Tepper, one of the cleverest investors on Wall Street, has probably bet the balance of Dean Foods will be sold off in parts. Probably the Fresh Dairy Direct-Morningstar and WhiteWave/Alpro business units would draw the most bidders. Watch for Dean to be broken up, to satisfy debtholders and arge investors.
Frontier Airlines
The carrier is owned by Republic Airways Holdings and was bankrupt when Republic bought it in 2009. Republic recently merged another of its holdings, Midwest Air, into Frontier. Denver-based Frontier is simply too small to compete in the domestic carrier market -- which has become increasingly dominated by large airlines that are growing due to mergers.
Wall Street has also become increasingly worried about Republic's future. Its shares are down 13% over the last quarter, while shares in rival JetBlue are up 9% during the same time frame. Frontier's Milwaukee hub, which serves the East and Midwest, and its Denver hub, which serves the West, the South, and Mexico, would be valuable to a larger carrier. Airline mergers and buyouts like the Continental/United deal and Delta's takeover of Northwest are popular in the industry because they allow for personnel reductions and route cuts -- as well as trimming the number of aircraft that have to be maintained. Two airlines together can have a better margin than separately. Frontier is a buyout target; its brand is not.
Sara Lee
The company that makes Ball Park hot dogs and Jimmy Dean breakfast foods is already being circled by corporations in similar businesses and by private equity firms -- groups interested in breaking Sara Lee up. Apollo Global Management has recently considered a bid. JBS, the Brazilian meat processor, made an offer that was turned down.
Media reports say Sara Lee is in the midst of a plan to separate its coffee and meat businesses. If that happens, the new companies may be named Hillshire Farm and Pickwick Tea. A deal to sell off pieces of the firm will probably happen before midyear.
Borders
The large bookstore chain is almost gone already. The only question remaining is whether it will be dissolved or sold to a related retailer like Barnes & Noble. It appears Borders has little choice other than to go bankrupt, given its debt and cash-flow situation. Two ominous signs for the bookseller: It says it's unable to pay some of its largest publishers for their books.
Border's stock also dropped under $1 a share, a warning sign that the shares could eventually be delisted -- that is, if Borders lasts long enough. The company's 500 locations may have value to a buyer, but its name does not, being associated with little more than failure.
Gateway
Gateway was bought by Taiwanese PC giant Acer in 2007. Acer is currently the No. 3 PC company in the world after Dell and Hewlett-Packard. The buyout was not unlike the one that China-based Lenovo made of the IBM PC division. Lenovo found the IBM brand was useful for marketing in the U.S., but dropped the name in favor of its own. Lenovo saw no reason to support two brands any longer and wanted to be recognized by its corporate name in the U.S. market.
Acer, meanwhile, has become an established brand in the U.S. over the last two years, particularly for its netbooks and notebooks -- while the Gateway brand has faded. Gateway is still a stand-alone corporation but will likely disappear this year.
DollarThrifty
Dollar Thrifty has a tentative deal to be bought by Avis Budget -- but the FTC has not given the transaction final approval. If the buyout closes, then the Avis, Budget, Dollar and Thrifty car rental businesses will all be under one roof. Dollar Thrifty has lost any momentum in its efforts to expand. The company said in December that it would add 31 new franchises in the U.S. It has 1,550 locations in 81 countries worldwide.
Ironically, Dollar Thrifty is itself the result of a merger of two companies. Thrifty was owned by Chrysler and combined with Dollar in 1990. Avis should close its takeover by mid-2011
Answers Corp.
The online search firm's stock is down 40% in five years. Google, in comparison was up nearly 40% during that period. The smaller company had third-quarter revenue of only $4.5 million, which means it barely has a reason to be a public company. Operating income for the quarter was only $379,000, and its total average page views daily are about 14 million.
Answers will likely be sold to a company that could use its technology platform and unique visitor traffic. This might include one of the portals or large online content companies like News Corp. The company's market value is only $65 million, which is pocket change for a really large Web company.
E*Trade
There are too many big discount brokers in the U.S. There have been persistent rumors that E*Trade will be bought by one of its larger competitors --Charles Schwab or TDAmeritrade. The rumors even caused a large move in E*Trade's options early last month. Broker Collins Stewart downgraded E*Trade shares recently, pointing to problems with loan portfolio growth on the banking side of the online brokerage's business.
Wall Street's view of the other two discounters is much more positive. The brokerage business has been ideal for consolidation for years. Full-service brokers went through a large number of mergers and acquisitions in the 1970s, 80s and 90s. The reason for the rollups were compelling then as they are now for E*Trade. There are a number of expensive duplicate functions among these companies -- which include marketing costs, trading platforms and administration. Either Schwab or TDAmeritrade will use those economies of scale to buy E*Trade, the weakest member of the sector.
10 American Companies That Will Disappear in 2011
DOUGLAS MCINTYRE
01/18/11
http://www.dailyfinance.com/story/investing/10-american-companies-that-will-disappear-in-2011/19798647
Saab USA
Saab has tried to create a renaissance of sorts. The company was sold to Netherlands specialty carmaker Spyker last year. Spyker took an awful risk, particularly in the U.S. -- because Saab is one of the few car firms that did recover when the U.S. car market expanded last year. The total number of cars and light vehicles sold in America in 2010 was up 11% to 11.6 million.
Sales of some niche brands surged. Porsche sales in the U.S. were up 29% to over 29,000. Audi sales rose 22% to over 101,000. But Saab sales collapsed -- falling 37% to 5,445. American car companies have also created new lines of vehicles that have begun to sell well, particularly in the middle market where Saab operates. The Japanese still control the lower-price, high-quality portion of the market. And Korea's Hyundai took share from nearly everyone else last year, as its sales rose over 24% to just above 538,000. There's no room in the American market for tiny operator like Saab.
Office Depot
The company is running third in a three-horse race with Office Max and Staples. Office Depot also has to compete with small business centers in Sam's Clubs and Costcos. The firm operates on razor-thin margins, while managing 1,150 locations -- which are very costly due to employee and real estate expenses. Office Depot is a strong candidate to be taken over by one of its rivals or a broader retail chain like Target.
The market is too competitive for Office Depot to stand on its own. A consolidation in the sector would allow a merged operation to cut thousands of people and close hundreds of locations. Operating margins, then, would not be so modest.
Dean Foods
The maker of dairy products like Land O'Lakes and Silk has struggled as much as any other large public company this year. The costs of raw milk, butterfat, soybeans and sugar have risen sharply. Dean Foods has also been crippled by debt. The firm's shares were down as much as 60% at one point during the last 12 months.
Despite all the bad news, hedge fund investor David Tepper bought a 7.35% stake in the company. Dean Foods shares rose 9% after the announcement. Dean has already sold its yogurt business to Schreiber Foods. And Tepper, one of the cleverest investors on Wall Street, has probably bet the balance of Dean Foods will be sold off in parts. Probably the Fresh Dairy Direct-Morningstar and WhiteWave/Alpro business units would draw the most bidders. Watch for Dean to be broken up, to satisfy debtholders and arge investors.
Frontier Airlines
The carrier is owned by Republic Airways Holdings and was bankrupt when Republic bought it in 2009. Republic recently merged another of its holdings, Midwest Air, into Frontier. Denver-based Frontier is simply too small to compete in the domestic carrier market -- which has become increasingly dominated by large airlines that are growing due to mergers.
Wall Street has also become increasingly worried about Republic's future. Its shares are down 13% over the last quarter, while shares in rival JetBlue are up 9% during the same time frame. Frontier's Milwaukee hub, which serves the East and Midwest, and its Denver hub, which serves the West, the South, and Mexico, would be valuable to a larger carrier. Airline mergers and buyouts like the Continental/United deal and Delta's takeover of Northwest are popular in the industry because they allow for personnel reductions and route cuts -- as well as trimming the number of aircraft that have to be maintained. Two airlines together can have a better margin than separately. Frontier is a buyout target; its brand is not.
Sara Lee
The company that makes Ball Park hot dogs and Jimmy Dean breakfast foods is already being circled by corporations in similar businesses and by private equity firms -- groups interested in breaking Sara Lee up. Apollo Global Management has recently considered a bid. JBS, the Brazilian meat processor, made an offer that was turned down.
Media reports say Sara Lee is in the midst of a plan to separate its coffee and meat businesses. If that happens, the new companies may be named Hillshire Farm and Pickwick Tea. A deal to sell off pieces of the firm will probably happen before midyear.
Borders
The large bookstore chain is almost gone already. The only question remaining is whether it will be dissolved or sold to a related retailer like Barnes & Noble. It appears Borders has little choice other than to go bankrupt, given its debt and cash-flow situation. Two ominous signs for the bookseller: It says it's unable to pay some of its largest publishers for their books.
Border's stock also dropped under $1 a share, a warning sign that the shares could eventually be delisted -- that is, if Borders lasts long enough. The company's 500 locations may have value to a buyer, but its name does not, being associated with little more than failure.
Gateway
Gateway was bought by Taiwanese PC giant Acer in 2007. Acer is currently the No. 3 PC company in the world after Dell and Hewlett-Packard. The buyout was not unlike the one that China-based Lenovo made of the IBM PC division. Lenovo found the IBM brand was useful for marketing in the U.S., but dropped the name in favor of its own. Lenovo saw no reason to support two brands any longer and wanted to be recognized by its corporate name in the U.S. market.
Acer, meanwhile, has become an established brand in the U.S. over the last two years, particularly for its netbooks and notebooks -- while the Gateway brand has faded. Gateway is still a stand-alone corporation but will likely disappear this year.
DollarThrifty
Dollar Thrifty has a tentative deal to be bought by Avis Budget -- but the FTC has not given the transaction final approval. If the buyout closes, then the Avis, Budget, Dollar and Thrifty car rental businesses will all be under one roof. Dollar Thrifty has lost any momentum in its efforts to expand. The company said in December that it would add 31 new franchises in the U.S. It has 1,550 locations in 81 countries worldwide.
Ironically, Dollar Thrifty is itself the result of a merger of two companies. Thrifty was owned by Chrysler and combined with Dollar in 1990. Avis should close its takeover by mid-2011
Answers Corp.
The online search firm's stock is down 40% in five years. Google, in comparison was up nearly 40% during that period. The smaller company had third-quarter revenue of only $4.5 million, which means it barely has a reason to be a public company. Operating income for the quarter was only $379,000, and its total average page views daily are about 14 million.
Answers will likely be sold to a company that could use its technology platform and unique visitor traffic. This might include one of the portals or large online content companies like News Corp. The company's market value is only $65 million, which is pocket change for a really large Web company.
E*Trade
There are too many big discount brokers in the U.S. There have been persistent rumors that E*Trade will be bought by one of its larger competitors --Charles Schwab or TDAmeritrade. The rumors even caused a large move in E*Trade's options early last month. Broker Collins Stewart downgraded E*Trade shares recently, pointing to problems with loan portfolio growth on the banking side of the online brokerage's business.
Wall Street's view of the other two discounters is much more positive. The brokerage business has been ideal for consolidation for years. Full-service brokers went through a large number of mergers and acquisitions in the 1970s, 80s and 90s. The reason for the rollups were compelling then as they are now for E*Trade. There are a number of expensive duplicate functions among these companies -- which include marketing costs, trading platforms and administration. Either Schwab or TDAmeritrade will use those economies of scale to buy E*Trade, the weakest member of the sector.
10 American Companies That Will Disappear in 2011
DOUGLAS MCINTYRE
01/18/11
http://www.dailyfinance.com/story/investing/10-american-companies-that-will-disappear-in-2011/19798647
Monday, September 27, 2010
From Blockbuster to turkey
http://www.economist.com/blogs/newsbook/2010/09/blockbuster_files_bankruptcy
From Blockbuster to turkey
Sep 23rd 2010,
The Economist
IN THE early days of the commercial internet, it was often predicted that pure e-commerce sites would begin to struggle as bricks-and-mortar stores moved online. “Clicks-and-mortar” stores, which could reach consumers both on the internet and on the high street, were thought to be inherently superior. Surely Blockbuster would be able to crush Netflix, an online service that rents DVDs through the post? Surely Barnes & Noble, a bookseller, would easily see off Amazon?
As it turned out, they could not. Shares in Barnes & Noble have slumped over the past few years as those of Amazon have soared. The British arm of Borders, another media retailer, went into administration last year. And on September 23rd Blockbuster filed for Chapter 11 bankruptcy protection in New York. The firm, once owned by Viacom, a giant media conglomerate, aims to reduce its debts by about $900m. It is likely to close some of its 3,000 American stores. (The company’s non-American operations and franchised outlets are not affected by the bankruptcy filing.)
The growth of Netflix, a technologically savvy company with a vastly superior website and an attractive subscription model, was hard on Blockbuster. But the firm was caught in a pincer movement. On one side was Netflix. On the other was the decidedly low-tech Redbox, owned by Coinstar. Redbox rents films for one dollar a night through kiosks in drug and grocery stores—a 1950s technology applied successfully to a new medium.
Netflix is a long-tail company. Its vast selection of DVDs means consumers with rarefied tastes can indulge their taste for Satyajit Ray films and Italian comedies. The firm is promoting the online streaming of older films, which subscribers will increasingly be able to obtain through internet-connected television sets. Redbox, in contrast, focuses on big films and recently-released DVDs. Blockbuster thus faces a “clicks” competitor that offers an enormous selection of films and a “mortar” competitor that specialises in hits. Life in between is tough.
Tears in Tinseltown
There will be no gloating in Hollywood at Blockbuster’s struggles. Although the film studios greatly prefer to sell DVDs than rent them, they would rather rent through Blockbuster than through Netflix or Redbox. Warner Bros estimated in December that it makes $1.45 when a film is rented from a bricks-and-mortar store. It makes $1.25 from a subscription rental, and just one dollar when a film is rented from a kiosk (most people keep their dollar-a-night kiosk movies for two nights). And Blockbuster sells DVDs as well as renting them.
Hollywood wants to persuade consumers to rent films as videos-on-demand through their cable and satellite boxes. On each of these Warner Bros earns fully $3.50. To goose demand, studios now release some films as videos-on-demand before bringing them out on DVD. The worry is that the growth of two low-priced alternatives will persuade couch potatoes that films can be had cheaply. Netflix and Redbox have severely wounded Blockbuster. The next battle will pit them against the cable companies.
From Blockbuster to turkey
Sep 23rd 2010,
The Economist
IN THE early days of the commercial internet, it was often predicted that pure e-commerce sites would begin to struggle as bricks-and-mortar stores moved online. “Clicks-and-mortar” stores, which could reach consumers both on the internet and on the high street, were thought to be inherently superior. Surely Blockbuster would be able to crush Netflix, an online service that rents DVDs through the post? Surely Barnes & Noble, a bookseller, would easily see off Amazon?
As it turned out, they could not. Shares in Barnes & Noble have slumped over the past few years as those of Amazon have soared. The British arm of Borders, another media retailer, went into administration last year. And on September 23rd Blockbuster filed for Chapter 11 bankruptcy protection in New York. The firm, once owned by Viacom, a giant media conglomerate, aims to reduce its debts by about $900m. It is likely to close some of its 3,000 American stores. (The company’s non-American operations and franchised outlets are not affected by the bankruptcy filing.)
The growth of Netflix, a technologically savvy company with a vastly superior website and an attractive subscription model, was hard on Blockbuster. But the firm was caught in a pincer movement. On one side was Netflix. On the other was the decidedly low-tech Redbox, owned by Coinstar. Redbox rents films for one dollar a night through kiosks in drug and grocery stores—a 1950s technology applied successfully to a new medium.
Netflix is a long-tail company. Its vast selection of DVDs means consumers with rarefied tastes can indulge their taste for Satyajit Ray films and Italian comedies. The firm is promoting the online streaming of older films, which subscribers will increasingly be able to obtain through internet-connected television sets. Redbox, in contrast, focuses on big films and recently-released DVDs. Blockbuster thus faces a “clicks” competitor that offers an enormous selection of films and a “mortar” competitor that specialises in hits. Life in between is tough.
Tears in Tinseltown
There will be no gloating in Hollywood at Blockbuster’s struggles. Although the film studios greatly prefer to sell DVDs than rent them, they would rather rent through Blockbuster than through Netflix or Redbox. Warner Bros estimated in December that it makes $1.45 when a film is rented from a bricks-and-mortar store. It makes $1.25 from a subscription rental, and just one dollar when a film is rented from a kiosk (most people keep their dollar-a-night kiosk movies for two nights). And Blockbuster sells DVDs as well as renting them.
Hollywood wants to persuade consumers to rent films as videos-on-demand through their cable and satellite boxes. On each of these Warner Bros earns fully $3.50. To goose demand, studios now release some films as videos-on-demand before bringing them out on DVD. The worry is that the growth of two low-priced alternatives will persuade couch potatoes that films can be had cheaply. Netflix and Redbox have severely wounded Blockbuster. The next battle will pit them against the cable companies.
Friday, March 21, 2008
Borders explores sale, suspends dividend
http://news.yahoo.com/s/nm/20080320/bs_nm/borders_dc
Borders explores sale, suspends dividend
By Yinka Adegoke
3-20-8
Book retailer Borders Group Inc (BGP.N) on Thursday suspended its quarterly dividend and said it was reviewing strategic options, including the sale of some or all of its businesses, and its shares sank more than 30 percent to a new year low.
The company said its largest shareholder, Pershing Square Capital Management, had agreed to loan it $42.5 million and will receive options to buy a 19.99 percent stake in the company at $7 a share. Without the funding, the company may have faced liquidity issues, it said.
"Borders effectively announced this morning that they are out of cash and took a stopgap funding" from Pershing, Credit Suisse analyst Gary Balter said in a research note.
"We see little opportunity in the near term for Borders to be sold, with the No. 1 candidate Barnes & Noble not likely to pursue a deal," possibly at any price before a Chapter 11 filing, he added.
For its part, industry leader Barnes & Noble (BKS.N) said it had not been approached by Borders investment bankers regarding a purchase but would take a look and review a possible sale if it was contacted.
Borders said Pershing Square offered to purchase some of its businesses in Australia, New Zealand, Singapore and the United Kingdom for $125 million.
Borders has the right, but not the obligation, to require the hedge fund to buy those assets under the backstop purchase offer.
Borders shares had risen as much as 20 percent before the bell but reversed course and sank more than 33 percent in morning trading to a new low. Barnes & Noble, which reported better-than-expected earnings and raised its dividend on Thursday, was up more than 6 percent.
"This will be a challenging year for retailers due to continued uncertainty in the economic environment," Borders Chief Executive George Jones said in a statement. "Looking forward to 2008 and beyond, the company determined that additional capital was required to execute our operating plan."
Without the funding, Borders may have faced liquidity issues in the next few months, Jones said. Borders said it was suspending the dividend to preserve capital for operations and strategic initiatives.
Borders said it had appointed JPMorgan Securities (JPM.N) and Merrill Lynch & Co (MER.N) as financial advisers.
Borders reported net profit of $64.7 million, or $1.10 a share, for the fourth quarter ended on February 2, compared with a year-earlier loss of $73.6 million, or $1.25 per share, that included large charges for closing Waldenbooks stores.
Excluding nonoperating charges and discontinued operations, earnings were $1.44 a share.
Analysts on average expected $1.42 per share, according to Reuters Estimates.
Revenue fell to $1.35 billion from $1.37 billion, but Borders said sales were up 2.8 percent after excluding the impact of an extra week in the year-earlier period.
Jones said that although the company was on track to reach its financial targets, worsening economic conditions would slow its progress.
At Barnes & Noble, net income came to $115 million, or $1.79 a diluted share, for the fiscal fourth-quarter ended February 2, down 9 percent from $126.7 million, or $1.83 a share, a year earlier.
Excluding benefits from property insurance and litigation settlements, earnings were $1.69 a share, compared with the $1.70 analysts expected, according to Reuters Estimates.
Consolidated sales at Barnes & Noble fell about 2 percent to $1.85 billion from the year earlier, which included an extra week.
Barnes & Noble said its board raised its quarterly dividend to 25 cents a share from 15 cents a share, beginning with the June payout.
Borders began a turnaround plan last year. It is closing underperforming Waldenbooks stores, weighing options for its international units, and refocusing on its core U.S. store operations.
The retailer is trying to fend off competition not only from Barnes & Noble, but also from online retailers, where consumers have been turning for cheaper books, CDs and DVDs.
Borders shares were down $2.39 or 33.8 percent, to $4.70 in morning trading on the New York Stock Exchange, while Barnes & Noble was up $1.85, or 6.6 percent, to $29.85.
(Additional reporting by Karen Jacobs in Atlanta, editing by Dave Zimmerman)
Borders explores sale, suspends dividend
By Yinka Adegoke
3-20-8
Book retailer Borders Group Inc (BGP.N) on Thursday suspended its quarterly dividend and said it was reviewing strategic options, including the sale of some or all of its businesses, and its shares sank more than 30 percent to a new year low.
The company said its largest shareholder, Pershing Square Capital Management, had agreed to loan it $42.5 million and will receive options to buy a 19.99 percent stake in the company at $7 a share. Without the funding, the company may have faced liquidity issues, it said.
"Borders effectively announced this morning that they are out of cash and took a stopgap funding" from Pershing, Credit Suisse analyst Gary Balter said in a research note.
"We see little opportunity in the near term for Borders to be sold, with the No. 1 candidate Barnes & Noble not likely to pursue a deal," possibly at any price before a Chapter 11 filing, he added.
For its part, industry leader Barnes & Noble (BKS.N) said it had not been approached by Borders investment bankers regarding a purchase but would take a look and review a possible sale if it was contacted.
Borders said Pershing Square offered to purchase some of its businesses in Australia, New Zealand, Singapore and the United Kingdom for $125 million.
Borders has the right, but not the obligation, to require the hedge fund to buy those assets under the backstop purchase offer.
Borders shares had risen as much as 20 percent before the bell but reversed course and sank more than 33 percent in morning trading to a new low. Barnes & Noble, which reported better-than-expected earnings and raised its dividend on Thursday, was up more than 6 percent.
"This will be a challenging year for retailers due to continued uncertainty in the economic environment," Borders Chief Executive George Jones said in a statement. "Looking forward to 2008 and beyond, the company determined that additional capital was required to execute our operating plan."
Without the funding, Borders may have faced liquidity issues in the next few months, Jones said. Borders said it was suspending the dividend to preserve capital for operations and strategic initiatives.
Borders said it had appointed JPMorgan Securities (JPM.N) and Merrill Lynch & Co (MER.N) as financial advisers.
Borders reported net profit of $64.7 million, or $1.10 a share, for the fourth quarter ended on February 2, compared with a year-earlier loss of $73.6 million, or $1.25 per share, that included large charges for closing Waldenbooks stores.
Excluding nonoperating charges and discontinued operations, earnings were $1.44 a share.
Analysts on average expected $1.42 per share, according to Reuters Estimates.
Revenue fell to $1.35 billion from $1.37 billion, but Borders said sales were up 2.8 percent after excluding the impact of an extra week in the year-earlier period.
Jones said that although the company was on track to reach its financial targets, worsening economic conditions would slow its progress.
At Barnes & Noble, net income came to $115 million, or $1.79 a diluted share, for the fiscal fourth-quarter ended February 2, down 9 percent from $126.7 million, or $1.83 a share, a year earlier.
Excluding benefits from property insurance and litigation settlements, earnings were $1.69 a share, compared with the $1.70 analysts expected, according to Reuters Estimates.
Consolidated sales at Barnes & Noble fell about 2 percent to $1.85 billion from the year earlier, which included an extra week.
Barnes & Noble said its board raised its quarterly dividend to 25 cents a share from 15 cents a share, beginning with the June payout.
Borders began a turnaround plan last year. It is closing underperforming Waldenbooks stores, weighing options for its international units, and refocusing on its core U.S. store operations.
The retailer is trying to fend off competition not only from Barnes & Noble, but also from online retailers, where consumers have been turning for cheaper books, CDs and DVDs.
Borders shares were down $2.39 or 33.8 percent, to $4.70 in morning trading on the New York Stock Exchange, while Barnes & Noble was up $1.85, or 6.6 percent, to $29.85.
(Additional reporting by Karen Jacobs in Atlanta, editing by Dave Zimmerman)
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