I think you are on the right track.

Dividend is 1$/sh, and as I post this price is around 17$/sh. Dividend yield is therefore about 5.8%. Consensus estimate for the year ending jan. 2010 is around 90 cents. So dividend exceeds earnings, which might be the reason why the price has been going down despite the fact that the share is getting an ever increasingly attractive yield. In other words, the Street may be anticipating that the dividend will be cut.

However, typically on a yearly basis (marked seasonality doesn't allow for quarterly analysis) depreciation is about 180 million US$ or 3.27 US$/share (calculated at 55 million shares outstandings). This means that earnings include a non cash expense of around that amount, so a consensus estimated recurring operating cash flow for this year is in the neighborhood of 4.17 US$/sh. That is the cash they will have available to pay the 1$ dividend they have at this time (And this is a zero debt company).

Do I think the Riggio's have any need or incentive to eliminate the dividend any time soon? No. Does the kindle represent a real threat for Barnes And Noble profitability in the near term? I don't think so. The Nook and the Kindle have a long way to go before they represent an important role in the book's market. Amazon stock is expensive, Barnes and Noble is dirty cheap, the gap will close in the next few months and with an economy that is showing real signs off recovery I think this is the moment get on this bus ...