E-Commerce Stock Watch: Amazon.com Turns Up the Heat on Barnes & Noble

Barnes & Noble (NYSE: BKS) stock got hammered on Tuesday, dropping 4-9/16 (12.76 percent) to 31-3/16 after the bookseller warned that its earnings will fall below estimates for the last fiscal year and that it expects slower earnings growth this year.

The cost of keeping up with Amazon.com is one reason for the disappointing earnings. Barnes & Noble is scrambling to take back market share from Amazon.com, and doing so involves spending money on Internet advertising and marketing.

But Barnes & Noble still could be an attractive stock this year. Barnesandnoble.com’s initial public offering was postponed after Bertelsmann purchased a 50-percent stake in Barnes & Noble. Still, an IPO has a good chance of happening this year. How much will the “.com” be worth in the IPO? The way things are going in the Internet sector, nobody can be sure of anything except that it’s going to be worth a lot.

And don’t forget that Barnes & Noble is the exclusive bookseller of numerous high-quality, high-trafficked sites that aren’t going anywhere. The New York Times and Salon are two that come to mind.

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