Barnesandnoble.Com - New Initiatives, 2000-2001

In the first quarter of 2000 barnesandnoble.com acquired a 32-percent interest in eNews.com for $26.4 million in cash and $12.8 million in stock. As a result of the investment, eNews.com became the exclusive seller of magazines at www.bn.com with an offering of some 1,000 different magazine subscriptions. Barnesandnoble.com and parent company Barnes & Noblesubsequently acquired a majority interest in eNews in April 2001.

In February 2000 the company launched an Internet radio service called bnRadio, which allowed customers to listen to more than 25,000 full-length songs as well as three-to-five-minute selections from audio-books. In mid-2000 barnesandnoble.com launched an Internet television service, Barnes & NobleTV. Its first programs were three-minute films called book-Videos. In fall 2000 a daily author interview series debuted on the Internet service. Another initiative included the debut of Barnes & Noble University, a free online education resource that offered courses in a wide range of subjects through www.bn.com Around this time the online bookseller added a video store that offered tens of thousands of video titles in both DVD and VHS formats from the All-Movie Guide database. Titles were listed in 16 major genres and 800 subcategories, and the database included more than 65,000 cast and crew filmographies, reviews, as well as ratings and recommendations. The Video Interview Gallery allowed customers to view clips of major film stars.

In September 2000 barnesandnoble.com replaced Amazon.com as the featured bookseller on the popular Internet portal Yahoo!. Two months later, barnesandnoble.com completed its acquisition of Fatbrain.com, a transaction that Publishers Weekly called "the largest example so far of consolidation among online book retailers." Fatbrain was the third-largest online bookseller and specialized in professional and technical titles for the corporate market. In addition to online bookselling, Fatbrain was involved in digital publishing ventures through its subsidiary MightyWords, and in providing Web-based information management services, including document delivery, to large corporations. Following the acquisition, which was valued at $64 million, Fatbrain's operations were integrated into barnesandnoble.com In April 2001 barnesandnoble.com and MightyWords began selling articles that could be purchased, downloaded, and printed instantly through a new barnes andnoble.com Articles for Download store.

Other initiatives planned for 2001 included the launch of Barnes & Noble Digital, an electronic publishing imprint that would publish a variety of titles in e-book editions and sell them through bn.com Barnesandnoble.com and parent company Barnes & Noble also planned more joint programs to leverage the parent company's more than 550 brick-and-mortar bookstores. The joint initiatives included installing Internet service counters at Barnes & Noble super-stores and the creation of a Barnes & Noble loyalty program. In addition, customers who made purchases through barnesandnoble.com would be able to return items to Barnes & Noble stores for credit.

For the year 2000, barnesandnoble.com reported sales of $320.1 million, an increase of 65 percent over 1999, and a net loss of $65.4 million. The company's strategy for 2001 was to reach profitability in 2002 and to focus on cost cutting. In February 2001 the online bookseller laid off 350 workers, or 16 percent of its workforce. On the positive side, the company had a strong balance sheet and no outstanding debt, and sales for 2001 were projected to increase another 40 percent.