Is Borders (NYSE:BGP) the New Blockbuster (OTC:BLOAQ.PK)?

That Borders Group (NYSE:BGP) is in a crisis is an understatement, and appears to be the new Blockbuster (OTC:BLOAQ.PK), although at least with Blockbuster they have some hope of fighting their way slowly back via different ways of selling their products.

With Borders, what can they do to differentiate? Who would provide them with capital with basically no road map for the future as to generate revenue and earnings?

Canaccord commented, "The second-largest U.S. bookstore chain said its loss doubled in the third quarter, and warned it could face a liquidity crisis in 2011 if it does not raise money. Borders’ loss was $74.4 million between August and October, almost twice as much as the $37.7 million it lost in the same period a year earlier. Sales excluding new store openings were said to have fallen 12.6%, with no mention of performance over the important Black Friday/Cyber Monday weekend. “Our third-quarter results reflect the business challenges facing Borders and the industry at large,” noted Chief Executive Mike Edwards. While it was “disappointed” with the results, Borders had begun to 'vigorously address these challenges,' he added. More concerning, though, Borders said its borrowing capacity was reduced during the third quarter because a third-party valuation lowered the estimated liquidation value of its inventory. The company is “taking several actions” to improve liquidity, including 'detailed discussions with potential lenders for replacement financing that we believe will provide sufficient liquidity through at least the beginning of 2012.' It is also considering the sale of certain assets and some moves to boost sales, but noted that if the steps it is taking to remedy its woes are unsuccessful, it could violate its credit agreements in the first calendar quarter next year, 'which could result in a liquidity shortfall.' The next chapter for Borders is hard to read, given that hedge fund luminary Bill Ackman recently tabled a proposal for Borders to buy larger rival Barnes & Noble (NYSE:BKS). It is unusual for a smaller company to want to buy a larger company, and particularly unusual when it has no money."

Borders closed Monday at $1.24, up $0.04, or 3.33 percent. Blockbuster soared to $0.1710, up $0.03, or 21.28 percent.