Borders Death Watch
If you have to announce bad news, you drop it in the Friday News Hole. For most business news, that’s the hour between 4PM and 5PM EST, after the NY markets close but before the end of the business day.
Of course the word is out there (and if it’s really bad news, it’ll stick around for a while) but for a relatively small segment (bookselling) of just one part of the overall economy (retail) and with other news casting long shadows — the events in Egypt, for example, or Lindsey Lohan for that matter — the media’s attention is divided and a small bit of business news just might fall through the cracks, or even seem like ‘old news’ by Monday.
If I were running a corporate PR department, this would be a great day to drop a Bomb. Even if they aren’t quite ready to file yet, Borders could do a lot worse than to announce their bankruptcy this afternoon anyway.
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“Hedge fund financier acknowledges $125 million loss on Borders investment” – covered here http://www.annarbor.com/business-review/borders-investor-acknowledges-125-million-loss-on-investment/ by Borders’ local paper, referencing the Bloomberg BusinessWeek article:
Bill Ackman’s Soft Power — the main focus of that article, as I read it, is that Bill Ackman is a prick. —A lucky prick, who has made money, but who has also lost it. If I had $9 Billion and a staff of MBAs I could be expected to do at least as well. As cited in the article Ackman is seen by others as “a spoiled child unaccustomed to being told, ‘no.’” He’s not smart — at least, not any smarter than the folks he has working for him — he’s just rich, and with all the so called ‘luck’ that money buys you. Ackman at one point owned stakes in both Barnes & Noble and Borders — he was betting on (and actively campaigning for) a merger of the two booksellers. Only at the end of 2008 did he divest his B&N shares, and also doubled-down on the Borders Bet, providing additional loans when it looked like no one else cared.
Of course, even as recently as 2 months ago, Ackman was still fishing for his much beloved B&N&B merger — and with the expected payday that would engender, who wouldn’t? — but Ackman both undervalued B&N and has no concept of all of Len Riggio, a self-made man with pendulous balls of brass who actively defends his ‘turf’ and who genuinely understands his business and, dare I say it, loves books and bookselling. If the Borders/B&N combination actually made any kind of sense, Riggio would have been the first person to bring it up.
Borders has not really benefited from Ackman’s involvement, even with all his money. A restructuring 2 years ago wouldn’t have been any easier, or less messy, but the company wouldn’t have racked up those 2 years of losses, either. Borders has posted $800 Million in losses since 2006 — the writing has been both on the wall and in official SEC filings for quite some time.
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So: I predict an announcement in a little over 2 hours, that Borders is in fact filing for bankruptcy, if not today than quite soon.
I’ll be at work at 4pm so I won’t know for sure until much later tonight.
