While the reign of Borders CEO George Sanders has done little for this company I’ve labored for now starting year 11, most of this can be blamed on former CEO Greg Josefowicz, and his short-sightedness when it came to understanding what its core business wanted. Hell, it knew what its investors wanted, but had no idea what the people walking through the door wanted.
I believe Borders problems started when it went public in 1995, but was exasperated by some of the biggest business blunders anyone has seen. First would be not having any foot hold in the e-universe. Josefowicz’s failure to capture any sort of market share in the internet world in the late 90's resulted in a loss of millions, and then their idiotic partnership with Amazon led to even bigger loss, and making the company a laughing stock to any potential investor. Their excess baggage continued with the international expansion, which even Barnes & Noble realizes is a mistake by the virtue of them staying away from it all together. Then acquisition of Paperchase dragged Borders down even further. This has all lead to poor stock prices and a debt of $500 million.
Now, with Pershing Square Capital owning 18% of the company and Pershing’s fund manager William Ackman making an ass out of himself, they’re further eroding Borders as a company. I’m unsure of the logic Ackman uses, as any internet search of him brings up oodles of information on him. It appears Ackman buys up large shares of stakes in companies and then forces the Board into doing what he says, using what is called “stockholder activism” to get what he wants.
While I’m sure any stockholder should do what’s necessary to protect its investment, but it appears Ackman’s mischief-making gives a bad name to shareholder activism. What’s wrong with the old adage of buy low, sell high? I’m guess dealing with Ackman must be a pain in the ass.
I believe Borders problems started when it went public in 1995, but was exasperated by some of the biggest business blunders anyone has seen. First would be not having any foot hold in the e-universe. Josefowicz’s failure to capture any sort of market share in the internet world in the late 90's resulted in a loss of millions, and then their idiotic partnership with Amazon led to even bigger loss, and making the company a laughing stock to any potential investor. Their excess baggage continued with the international expansion, which even Barnes & Noble realizes is a mistake by the virtue of them staying away from it all together. Then acquisition of Paperchase dragged Borders down even further. This has all lead to poor stock prices and a debt of $500 million.
Now, with Pershing Square Capital owning 18% of the company and Pershing’s fund manager William Ackman making an ass out of himself, they’re further eroding Borders as a company. I’m unsure of the logic Ackman uses, as any internet search of him brings up oodles of information on him. It appears Ackman buys up large shares of stakes in companies and then forces the Board into doing what he says, using what is called “stockholder activism” to get what he wants.
While I’m sure any stockholder should do what’s necessary to protect its investment, but it appears Ackman’s mischief-making gives a bad name to shareholder activism. What’s wrong with the old adage of buy low, sell high? I’m guess dealing with Ackman must be a pain in the ass.
2 comments:
For years I was a loyal Borders customer. I was so impressed with store 32 when it opened that I vowed to never buy a new book anywhere else, and I didn't for many years.
Then Borders did away with all the things that made it a place for booklovers. The depth in the collection and the hard-to-find titles disappeared, and every square inch of space became filled with cheap crap that had nothing to do with books. It basically became just like Barnes&Noble, and I felt released from my promise.
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