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Watching events unfold at Borders Group (NYSE: BGP) over the past year or so has been kind of like watching a drunk guy standing on a bench delivering a speech: it seems crazy, then you think there could possibly be some kind of point, then you quickly realize that, no, the guy isn't making any sense.Yesterday, the company released a press release succinctly titled "Borders Group Implements Corporate Job Eliminations as Part of Previously Announced Initiative to Reduce Annual Expenses by $120 Million." With phrasing like that, it's a good thing Borders is selling books, not writing them.
The company is cutting 156 corporate jobs in the midst of its efforts to 1) launch an e-commerce site to compete with Amazon.com (NASDAQ: AMZN) and 2) sell itself, with rumors suggesting that Barnes & Noble (NYSE: BKS) is the most interested party.
In other words, this is a perfect time to simplify things by eliminating 20% of the corporate workforce. Except that, no, it really isn't. Any strategic buyer will eliminate a lot more jobs than that, and all this will do is toss the company into more chaos as it tries to do a ton of new stuff. And if laying off 20% of the corporate staff doesn't create problems, than the CEO should be fired because Borders was the most inefficiently run company on the planet.
But the larger question here is this: does Borders really plan to launch a successful e-commerce site while slashing jobs and trying to sell itself? The latter two developments seem to suggest that Borders has essentially given up on the website as a long-term savior, making it an even bigger waste of money because if Barnes & Noble buys it, they'll have no use for the site -- they'll simply fold it into their own.
That money should have been used to pay down debt, and now shareholders are paying the price. And yet somehow George Jones, who became the company's CEO in July of 2006, still has his job. I guess we can add him to Jimmy James' duo of Cher and cockroaches as the beings who would survive a nuclear holocaust.
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Reader Comments (Page 1 of 1)
6-07-2008 @ 5:16PM
John E said...
I've read several blogs with ignorant comments like this:
"does Borders really plan to launch a successful e-commerce site while slashing jobs and trying to sell itself? The latter two developments seem to suggest that Borders has essentially given up on the website as a long-term savior, making it an even bigger waste of money because if Barnes & Noble buys it, they'll have no use for the site -- they'll simply fold it into their own."
I just can't take it anymore. It makes absolutely no logical sense that Borders would announce their website as a key component of their strategic plan more than a year ago, spend significant capital on it, launch it with lots of press, and then give up on it a week later.
I suppose you're trying to make the point that the moves Borders is making don't make sense, but your logic defies reality. I suppose you never allowed for the fact that Borders is actually doing what they said they would do. You never allowed for the fact that George Jones seems to be making tough decisions to cut expenses as part of managing a business regardless of whether or not the business will be sold. What if the buyer is not Barnes and Noble but instead a private equity player? There, the moves would likely be welcomed by the potential buyer.
Either way, your commentary is just another run of ignorant opinion without support.