Pulse Detected at Borders

Borders has a new CEO, Ron Marshall, and he's been putting in a lot of time on the horn assuring publishers that though his bookstore chain has been taking a lickin' it keeps on tickin'.

This according to the Wall Street Journal. "Publishers and other suppliers said that Borders is currently paying its bills," says WSJ. "But the retailer has been aggressively selling assets, slashing costs, laying off employees, and reducing debt to stave off the kind of financial crisis that could result in a Chapter 11 bankruptcy filing."

Borders is in a classic bind because some publishers have been supplying books in cautious quantities, and others may not have supplied any at all until they see if the chain survives. But standing on the umbilical could only accelerate the chain's demise. Which puts publishers in a classic bind of their own: if Borders fails, publishers that withheld product will bear responsibility; if it survives, those same publishers will lament lost sales opportunities.

In any event, at least, as of 5 AM on Friday, January 9, 2009, Borders can sing, "I'm still here." Just bear in mind that the name of the Sondheim show that tune appears in is "Follies."

Meanwhile, Borders' rival Barnes & Noble got an infusion of optimism when it was announced that Yucaipa, a private equity outfit owned by billionaire investor Ron Burkle, had bought 8.3% of the company's stock for about $67.3 million. Does anybody find this odd? A month ago B&N czar Len Riggio was lamenting that the 2008 holiday season was shaping up the be the worst he'd seen in three decades, nor did he see much light on the 2009 horizon.

What does Ron Burkle know that the rest of us don't?

Don't leave the theatre. Act II of Follies is about to begin...

RC