Ron Bukle’s fierce battle for Barnes & Noble Inc. (NYSE:  BKS) is  baffling for many reasons.  The biggest mystery is why he is bothering at all.

Barnes & Noble’s prospects are so bleak that it is hard to see what appeal it would have for anybody, especially a billionaire investor.   The company’s value is so buried that Ron Burkle would need an archaeological dig to find it. In the 13 weeks ended July 31, the retailer lost $62.5 million, or $1.12 per share, versus net income of $12.3 million or 21 cents, during the year earlier period. The company’s cash and cash equivalents totaled approximately $27 million, according to the latest 10-K filed with the Securities & Exchange Commission.  Then there are the 720 bricks-and-mortar stores, most of which are locked in long-term leases of 10 to 15 years. Odds are that these are about impossible to break.

“Barnes & Noble has approximately 400 leases up for renewal by April 30, 2014, with over half of these renewals scheduled for fiscal year 2012 and fiscal year 2013,” the filing says.”If the cost of leasing existing retail stores increases, Barnes & Noble may not be able to maintain its existing store locations as leases expire. In addition, Barnes & Noble may not be able to enter into new leases on acceptable terms, or at all, or it may not be able to locate suitable alternative sites or additional sites for new retail stores in a time.”

The company’s online presence is dwarfed by the likes of Amazon.com Inc (NASDAQ: AMZN), whose Kindle reader has the lion’s share of the e-reader business along with the Apple Inc.  (NASDAQ:  AAPL) iPad, leaving the Barnes & Noble Nook with the scraps.  Its hard to believe that Barnes & Noble was considered to be the Wal-Mart Inc. (NYSE:  WMT) of book retailing.  That never happened, of course.

Barnes & Noble has a market capitalization of about $971 million.  Lord knows were it would be if the retailer had not announced it was for sale. Amazon.com, by contrast, has a market cap of around $67 billion.  As the Wall Street Journal recently noted,  in 2001, Barnes & Noble was worth $2.2 billion and Amazon $3.6 billion.

As if that were not enough,  Barnes & Noble has a founding family bent on destroying shareholder value. Leonard Riggio, the company’s Founder and Chairman, and Stephen Riggio, the Company’s Vice Chairman, are brothers and together own about 32% of the company’s shares.   Riggio has run his company into the ground.  Burkle is right that he has run the company like a personal piggybank and that the board has done a lousy job of oversight.  But the mystery remains about why he is bothering to take up the cause.

Here is New York magazine’s theory: “Burkle is interested in Barnes & Noble’s formidable brand and its valuable real estate, but he’s not particularly passionate about books, and he has made clear his distaste for how Riggio has run the company.”

“Formidible brand? Maybe if it was 1998.  “Valuable real estate?  To whom?  Wal-Mart Stores Inc. (NYSE;WMT)?  The configurations don’t match.   About the only buyer crazy enough to buy Barnes & Noble is Riggio, the company’s founder.  Maybe Burkle’s game plan is to try and squeeze every last nickle from Riggio and walk away with a profit. Good luck with that one.

–Jonathan Berr

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