B&N Until the End?

The Wall Street Journal, February 23, 2011
"Barnes & Noble Profit Slides" By JEFFREY A. TRACHTENBERG

So, last week, Borders filed Chapter 11 bankruptcy. By definition, Chapter 11 is "a section of the bankruptcy Code that provides for thereorganization of an insolvent corporation under court supervisionand can establish a schedule for the payment of debts and, insome cases, a new corporation that can continue to do business." Earlier this week, it was reported that Barnes & Noble's profit has declined by 25 percent. Even though Barnes & Noble is the largest bookstore in the country, competing with Amazon.com, Google, and Apple is becoming even more difficult. In order to turn things around, Barnes & Noble has cancelled its quarterly dividend. Doing so has freed up $60 million that is planned to be used for digital strategies and other opportunities in the future. 


Digitalization is growing exponentially these days because of online bookstores and e-readers. It has been said that this digitalization played a role in Borders' closing because the store did not jump on the digitalization bandwagon fast enough. Trying to keep up with this digital movement, Barnes & Noble has spent a large sum in order to stay in the running alongside the others said above. This sum of money is sinking profit for Barnes & Noble. The company's contribution to the digital movement is the Nook line of e-readers. Currently, Barnes & Noble makes up 25 percent of the e-book market in the United States, and they sell twice as many e-books as they do physical books within the store and online at BN.com. 


By midday Tuesday, shares were down 11 percent, but Barnes & Noble says the company is still going strong. Even though physical book sales are continuing to decline, the quality of customer service when purchasing a Nook and the addition of educational books and games are helping Barnes & Noble remain confident. Barnes & Noble is also hoping that the closing of a couple hundred Borders stores will boost revenues again. Finally, based on Borders announcement last week, Barnes & Noble said that it will not be issuing any more sales or earning guidance for the remainder of the 2011 fiscal year. 




When buying books, I always go to Barnes & Noble; I have never been to Borders. I have no personal knowledge of Borders' quality of service; but nonetheless, I hate to hear more evidence of the decline of physical books. Now, I love technology, but there is something about turning a real page of a book that brings satisfaction. In regards to the recent news, I think Barnes & Noble is doing a fine job of staying proactive during this digitalization boom. The store is still staying true to the physical book, yet it still recognizes the need to reinvent and redesign during this time of uncertainty within the journalistic world. Will physical books be gone forever? This is the million dollar question. The Nook has been a great life booster for Barnes & Noble during this time. It will be the comforting employees, who explain how a Nook works, that keep customers in the store. 


This article is written very thoroughly. The author explains the situation at hand and elaborates on key pieces of information such as the numbers of Barnes & Noble and the digitalization boom. At times, I think terms like Chapter 11 should be further explained, but then I remember that this is The Wall Street Journal. Most business minded people, who already know this term, are going to be the bulk of the readers. Also, there could be a bit more definition or clarity when talking about the numbers; but in the end, I am glad this story is being covered in The Wall Street Journal. The business and the journalism worlds have collided, not just to discuss the life expectancy of a bookstore but also to discuss the life expectancy of the physical book and the digital world. 

Oh No, Chevron!

The Wall Street Journal
In response to "Chevron Hit With Record Judgement"
February 15, 2011

Well this is not about another oil spill in the Gulf, but Chevron is facing charges as a result to environmental damages in Ecuador. An Ecuadorian judge has charged Chevron with a whopping $8.6 billion; and if Chevron does not publicly apologize within fifteen days of the charging, the fine will double. So far, officials representing Chevron say that they will appeal and that they will not pay or apologize. 


Chevron acquired this litigation when it took over Texaco in 2001, but the issue is been in debate for eighteen years. The Ecuadorians say that Texaco caused much damage to the Amazon during its time in the country from 1965 to 1992. Chevron had no ties to Ecuador until to took over Texaco. Chevron's officials say that there is no scientific proof that the damage was done by Texaco, but the Ecuadorians say otherwise. This has been a bitterly fought battle with each side accusing the other of improprieties. 


Each side is using its own court system in attempts to get its own way. Also, Chevron is suing the Ecuador for breaking trade agreements. Each side is appealing and threatening in order to stall. Although this whole situation may be a huge public relations nightmare for Chevron, the investors have not responded negatively, for Chevron's shares rose 1.3%. When the suit was first handed to Texaco in 1993, they decided that it should be heard in Ecuadorian courts; for at the time, American business interests were supported. In 2007, there was a transfer in power, and the new leader supports the Ecuadorian side. Now, each side is preparing financially for the next phase in the battle, for it is not over. 






The article informs the reader about the entire issue. The writer should be applauded for scaling the story down to this word limit without losing the meat of the story. It is good that both sides have adequate coverage and that sufficient quotes were pulled from each party. It is an interesting story that hopefully will have a follow-up soon. While reading this article, I cannot help but to question Chevron's judgement on acquiring Texaco. Was this case not public knowledge? Did Chevron think it could handle the case? It would have been nice to have read a short segment where Chevron answered that question. I guess I could do some research to check on archives from 2001. 

The Rich Get Richer

In response to The Wall Street Journal's article titled "Pay Gap Widens at Big Law Firms as Partners Chase Star Attorneys"

The big law firms in this country are trying a new strategy as they seek to rise above the economic downturns that have struck the United States in recent years. The old strategy that encouraged team work is barely keeping some of these major firms above the rest. Research shows that clients are wanting the best of the best individual lawyer and care less about the entire team or the entire firm. Because of this and the economic state, the big firms are widening the payment gap between the "star" partners and the rest of the lawyers. Now more than ever, law firms in Washington, New York, and Chicago want the "star power." They will seek out the best of the best and pay them tens of millions while the rest only see figures in the hundreds of thousands. 
"It's not without economic justification, but it comes with a cost in terms of ego and morale, " said William Roberts who worked for a big firm before starting his own practice in Boulder, Colo.
The old traditional ways are falling to the wayside as firms are craving after the big business generators, whatever the cost. Lawyers whose billing rates are not shaken by the economy are what is desired. Some firms like Swaine & Moore LLP keep their traditional ways of paying based on seniority and commitment to the firm, but saving million dollar bonuses for the "big stars" is becoming more of a normal thing. 




Critically, it is a good thing to announce this occurrence to the public. First, it shows that the big and the small are struggling with the United States' current economic situation; but more importantly,it follows up by telling the world how certain a specific group is dealing with the situation. This article does not show any emotion to affirm or negate, rather it seeks to inform and call attention to what others think. Should this question our ethical standards? Are the big law firms staying ethical? In the article it calls into question the motive by saying, "The divergence hurts the firm's partnership ethos, creating a sense among some partners that being a lawyer is 'less of a profession and more about making the most money you possibly can." I would start to question if the lawyers are really honest or selfish and greedy. Are there alternative motives to raising the pay checks and widening the gap between the "stars" and the rest? 


The writing immediately announces the issue and discusses both sides. Statistics from recent years show that the "piece of the pie" or the "bacon" is getting much bigger. It stirs up questions within the reader, but unfortunately the writer cannot say whether this is a good thing or a bad thing because this is not an opinion section. All in all, it is clearly written. 

2011: Year of Recovery for BP

The Wall Street Journal


On Tuesday, BP PLC had a fourth-quarter rise in net profit of 30 percent, and they resumed the quarterly dividend at seven cents per share. Downsizing in the United States and other new changes will begin their year of recovery. The article is good because it gets the readers' attention by a positive announcement and then continues that positivity by explaining that this year will be their recovery year. The story could have been covered from a different angle if the article were solely written around the "year of recovery" idea. Naming the article around the increased postings makes one think that that idea will be the main point; however, much of the article discusses the plan for 2011. 
I take a great interest in this article because the oil spill greatly affected my home state Mississippi. Since the initial breaking news, I have followed the "BP Story."