Squeezed by giant discount chains, the retailer is considering its options that could even include Barnes & Noble as a possible suitor.

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DETROIT — Borders could become the latest victim of the credit squeeze, announcing Thursday it may put itself up for sale.

Rival Barnes & Noble, meanwhile, saw fourth-quarter profit drop 9 percent as the industry struggles with intense competition from discounters.

Shares in Borders fell nearly 40 percent as the nation’s second-largest bookseller said it was considering options, including the sale of the company or certain divisions, and that it had lined up $42.5 million in financing to help it keep running through 2008.

“It’s a crunch of three C’s — credit, capital and consumer spending,” said Dan Ansell, a partner at Greenberg Traurig and chairman of its real-estate operations division.

Despite its earnings slide, Barnes & Noble boosted its dividends and surprised Wall Street with predictions of a profitable first quarter. Analysts said the nation’s largest bookseller would be the most likely suitor for Borders.

Both big bookstore chains have deepened discounts for their members, as shoppers are even more focused on low prices for discretionary items as they pay higher gas and food costs.

But analyst Michael Norris, of market-research firm Simba Information, said customers are turning to wholesale clubs and other discounters like Costco, Amazon.com Target and Wal-Mart for books and other merchandise.

“This is going to be a really tough year” for booksellers, Norris said.

Borders is a year into a restructuring that includes revamping its U.S. superstores as part of an effort to lure more shoppers. But the evaporating credit market led to the financing announced Thursday from hedge fund Pershing Square Capital Management, Borders’ largest shareholder.

“Now we have the flexibility necessary to get us where we need to be,” Chief Executive George Jones told analysts.

Borders suspended its quarterly dividend, which it will plow into operations, and says its plans for earnings-per-share growth may take longer than expected.

“Borders, which has finally found a CEO that can improve the merchandising, is finding that its poor cash flow and balance sheet is forcing it to make some very unattractive decisions,” Credit Suisse analyst Gary Balter wrote to investors.

The loan from Pershing Square, he noted, has a 12.5 percent interest rate.

Industry analysts gave a possible sale mixed prospects.

Barnes & Noble as a buyer worried Norris, who believes that the health of the book industry depends on the survival of many different players.

Barnes & Noble told analysts it had not been approached by Borders, but would take a “good look” if it were.

The pressure on booksellers has been felt globally. Tuesday, Bertelsmann reported a sharp drop in 2007 profit and said it was considering options for its struggling Direct Group, which operates book, music and DVD clubs.

Last month, Borders opened the first of its new concept stores, near its Ann Arbor, Mich., headquarters. The store offers downloading e-books and burning CDs hand in hand with browsing the shelves and paging through a best-seller in a comfy chair.

Changes seen there may be seen throughout the chain.