After shareholders backed its founder and his family Tuesday, concluding a contentious proxy fight, book seller Barnes & Noble Inc. is looking to its next chapter, focusing on e-commerce as shoppers shift from paper books to digital.
The company expects 31 percent of its revenue to come from e-commerce by 2014, up from 10 percent now, CEO William Lynch said Tuesday at the company's shareholder meeting. He said the company's brick-and-morter stores give it an advantage over online competitors in selling the Nook, its digital reader, because shoppers can come to stores and try it out.
"No one else can do this," he said. "We're really doubling down in e-reading and playing to our strengths."
Billionaire investor Ron Burkle had fought for months to increase his stake in the company, even taking the feud to court.
Preliminary results show shareholders rejected his nominees, favoring a slate of three directors nominated by the company, including chairman and founder Leonard Riggio. And they voted down a proposal from Burkle that would have let him expand his 19 percent stake.
But Burkle, who was not at the meeting, said in a news release that he would continue to press for changes at the company, the nation's largest brick-and-mortar book seller, though he did not specify any.
Barnes & Noble, based in New York, has been struggling to compete against Amazon.com and other online retailers both in selling traditional books and in the small but growing e-book market.
Shares added 4 cents to $16.49 Tuesday. Standard & Poor's analyst Michael Souers reiterated his "Hold" rating on the company and said it narrowly won the fight because company insiders controlled enough votes to defeat Burkle.
"While this vote does not inspire much confidence in the current board, we think the myriad of challenges facing (Barnes & Noble) are significant and that management has taken the necessary steps to combat these challenges head-on," Souers told clients in a note.
Barnes & Noble's fate is still unclear. Last month the company announced it was considering strategic options, including putting itself up for sale. The company did not provide an update on a possible sale at the meeting.
One group of possible new owners includes Riggio, who with his family controls about 29 percent of the company's outstanding shares. Burkle had contended that the shareholder rights plan that he proposed changing unfairly favors Riggio and his family.
Burkle called on Riggio Tuesday to offer "a clear and unequivocal public commitment to support the highest bid for the company."
At the meeting, Riggio did not mention Burkle or his Yucaipa Cos. investment firm by name but alluded to digs Yucaipa made at the board during the fight.
"They don't know what it is to have a high-class board," he said, adding later that the proxy fight was not easy, but he was pleased with the results.
Burkle has contended Riggio is not operating the company in the best interest of shareholders and has appealed the dismissal of his lawsuit challenging the company's "poison pill" shareholder rights plan, which limits individual stakes to 20 percent.
Barnes & Noble said Burkle is trying to take control of the company without paying a fair price.
Each side has disputed the other's claims.
Michael Norris, senior trade analyst at Simba Information, said he was pleased that Riggio and the company's slate won because he never knew what Burkle's strategy for the company was. Burkle had not said much about what he wanted to do with the company, other than get new leadership.
"This was probably Burkle's best shot in terms of getting control," he said. "I don't think the back-and-forth is going to stop. I do think he's going to continue to try and influence the company in some way."
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