Thursday, April 05, 2007

Backdating & bonds vex bookstore chains

Last year was a tough one for booksellers that ended on low note, which prompted the president of Books-A-Million to bemoan the period as "a tough fourth quarter for bookselling." And unfortunately it sounds like 2007 is off to a rocky start for the nation's two largest chains -- although for different reasons.

In an SEC filing, Barnes & Noble admitted it had improperly backdated stock options, a mistake it blamed on a "widespread misconception" held by senior management and faulty advice provided by its outside lawyer. There's no word if this will become a criminal investigation, but the WSJ article notes that there have been 10 recent criminal prosecutions for stock option manipulation. The B&N executives and directors who benefited from the backdating have agreed to forfeit any gains.

Borders is also having a tough time right now. Last year the retailer brought on a new CEO as part of a turnaround effort, but today management scuttled the sale of $250 million in convertible bonds "based on shareholder feedback." This article from the WSJ also has an interesting rumor -- some investors are pushing for the company to merge with B&N.

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  • Eric Jackson,

    Not a comment on this entry but an idea for another:
    How should an author decide whether they should get a book agent to land them a publisher,
    or if they should publish it themself and make it free online. What would be the advantages & disadvantages?


    By Anonymous Cartier, at 12:12 PM  

  • Hi, cartier,

    Great question. I think it depends on what you view as the audience for your book. If it is likely to have a broad audience then an agent might be a good idea because he or she can help you find the right publisher and negotiate a fair deal.

    If the book is intended more for a niche (and there's nothing wrong with that -- I'm a big "Long Tail" fan) then approaching publishers yourself or self-publishing might be better options.

    The key is being honest with yourself about your audience. While every author sees his book as having world-wide appeal, the reality is that most books don't sell more than a couple thousand copies. So take an honest look at that before you make your choice.

    Good luck!

    By Blogger Eric M. Jackson, at 12:22 PM  

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