Borders says it will postpone January payments to many vendors to conserve cash. It's not clear that the move will do anything more than delay a possible prepackaged bankruptcy or a breakup of the company.
In its announcement, reported in a number of media, the book chain said it "understands the impact of its decision on the affected parties." General Electric's (GE) financial division said it would provide Borders with a $550 million line of credit, but this involves conditions Borders may not be able to comply with.
Borders sales are now less than $500 million a quarter and could drop further if more stores are closed as part of a restructuring. By contrast, Barnes & Noble (BKS) quarterly sales are closer to $2 billion a quarter. Publishers may not need Borders sales to keep their own revenue at current levels.
Just as important, as sales of Kindle and Nook e-reader devices grow rapidly, e-book sales have begun to compete with book sales at bricks-and-mortar stores. Borders does not have any real market share in the new business. That may make it expendable.