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Tickers in this Article: BGP, BKS, AMZN, BAMM, SBUX
Borders Group (NYSE:BGP), the troubled book retailer in a radically changing industry, had an encouraging fourth-quarter earnings report. In addition to the improved fourth quarter, the company had less losses for the full year. The stock shot up about 45% on the news, to $2.54 a share.

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Finally Something Good
Income from continuing operations rose to $59.9 million for the quarter, up from $28.9 million the same quarter last year. The 91 cents-a-share earnings topped last year's Q4 mark of 48 cents. For the year, the loss was $110.2 million, down from $184.7 million. EPS showed a similar lower loss, at $1.83 per share, down from the $3.07 per share loss in 2008. Borders, which has struggled with its debt load, was also able to pay back Pershing Capital a $42.5 million note and pushed back some debt maturities from 2011 to 2014. All this gives the battered bookseller at least a temporary breather from the worst of its woes.

Trouble Still Looms
Borders' revenue slid from $1.1 billion to $937.3 million for the quarter. Comparable sales were off a staggering 14%. Barnes & Noble (NYSE:BKS), the other major brick-and-mortar book retailer, is still doing better than Borders, but its same-store sales slipped by about one-third as much. The true competition for Borders is regarded as Amazon (Nasdaq:AMZN), the behemoth online bookseller, yet the ultimate competition comes from the tectonic shift in the publishing and book business.The hard copy printed page and the brick-and-mortar book retailer is arguably a dying part of the industry, the only thing still to be determined is the future date of death.

What Competitors are Doing
Amazon's model of massive stocking and selling has made it the go-to retailer for books. Amazon was early in the e-reader field with Kindle, and will have its own app for the iPad. Barnes & Noble is developing its iPad app for its Nook reader, while Borders has lagged its competitors in even having an e-reader. Borders will partner with Kobo finally to get in the e-reader game with a $149 version.Will it be a case of arriving too late to the party?

Books A Million (Nasdaq:BAMM), another bookseller with retail outlets, has been trying to diversify and change up its approach. It recently invested in Yogurt Mountain, a self-serve frozen yogurt outlet. How this will be utilized by the book retailer is not yet clear. If it is something of a wrinkle on the Borders café approach with its stores, the Borders' coffee shop angle has never threatened Starbucks (NYSE:SBUX), nor has it given the bookseller much traction to boost its Borders or Walden Books outlets.

The Bottom Line
Reprieves by their nature are temporary. That's the case for Borders, as the continental plate shifting for publishing and bookselling has already occurred; only the scrambling for positions on the new landmass configuration needs to be sorted out. As with any historical major geologic industry shift, there will be casualties - extinctions. Borders, and even Barnes & Noble, have not convinced that their mild entries into the e-publishing terrain are going to be enough to save them. Perhaps some brilliant, unforeseen development will make physical stores viable in the book retailing industry, but what that could be is still to be seen. (Read Analyzing Retail Stocks to learn about the most important metrics to look at when analyzing retail stocks.)

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