This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

The Borders Story: The Final Chapter?

Chapter 5: The Great Restructure

In 2006 Borders stock was trading around $20 a share when hedge fund manager William Ackman decided the stock price had significant growth potential, predicting that it could trade as high as $36. Ackman's Pershing Square Capital acquired an 11% stake in the company, establishing a relationship that would eventually keep the book seller afloat.

But the stock never reached that level, peaking around $25 in March 2006, before beginning its treacherous descent.

By 2007, faced with a sluggish book market and intense competition from Amazon and discounters like Wal-Mart (WMT) and Costco Wholesale (COST), Borders realized it needed to refocus its attention on its core superstore business.

As part of its long-term strategic plan Borders said it would remodel stores, revamp its Borders Rewards loyalty program, scale down its Waldenbooks business, debut a new proprietary e-commerce site that would end its deal with Amazon and explore strategic alternatives for its international segment (which eventually resulted in the closure of its overseas stores).

At the time CEO George Jones said: "Our company's performance has fallen short in an industry that is increasingly competitive, technology driven and price sensitive. We recognize the urgent need to go on the offensive and drive significant change."

Chapter 6: It's an E-Reader World

But even as Borders embraced change, it discounted one critical element: the emergence of the e-reader.

Amazon released its first version of the Kindle in November 2007. To give Borders credit, it did manage to quickly follow up by partnering with Sony (SNE) to sell its e-reader in stores, but it overlooked a prime opportunity to develop its own device.

At the time, Sony's e-reader was also being sold at other retailers like Best Buy (BBY), Circuit City and Target (TGT), giving Borders little clout in the e-reader space.

Once again, Borders chose the joint-venture route, teaming up with Sony to create a co-branded site to sell e-books.

4 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AMZN $380.16 0.00%
BKS $24.90 0.00%
AAPL $128.46 0.00%
FB $78.97 0.00%
GOOG $558.40 0.00%


DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs