Barnes & Noble may spin off Nook business

The Nook business had high growth, but requires large investments

Bookseller Barnes & Noble is considering spinning off its Nook digital business to help it grow, following strong growth in sales of the Nook reader and tablet and digital content in the nine-week holiday period ending Dec. 31.

Competition from the likes of Amazon.com, and investments in advertising and international business for the Nook may however be putting pressure on the company's margins.

Barnes & Noble said Thursday it has decided to "pursue strategic exploratory work" to separate its Nook digital business, to capitalize on its rapid growth and its favorable position in the expanding market for digital content.

"We see substantial value in what we've built with our Nook business in only two years, and we believe it's the right time to investigate our options to unlock that value," Barnes & Noble CEO William Lynch said in a statement.

Barnes & Noble expects its Nook business will be about US$1.5 billion this fiscal year. It expects the business to continue to grow rapidly backed by continued growth in the U.S., and the opportunity to grow the Nook business internationally in the next 12 months. The company is already in discussions with strategic partners including publishers, retailers, and technology companies in international markets to expand the Nook business abroad.

Sales of the Nook devices including the tablet in the nine weeks to Dec. 31 were up 70 percent over the same period in the previous year, with a substantial portion of these sales coming through third-party retailers, as the company expanded Nook distribution.

The consolidated Nook business across all of the company's segments, including sales of digital content, device hardware and related accessories, increased 43 percent during the holiday period to $448 million, on a comparable sales basis.

The company's brick-and-mortar store sales in contrast grew by only 2.5 percent during the period to $1.2 billion.

Barnes & Noble expects full fiscal year 2012 consolidated sales of between $7.0 billion and $7.2 billion, down from an August forecast of $7.4 billion. Full year earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to be in a range of $150 to $180 million, lower than forecast by the company in December.

The company said its change in guidance is due primarily to a shortfall in sales of Nook Simple Touch, its black-and-white reader, as well as additional investments in growing the Nook business, such as in advertising to support new products and for international expansion in the back half of the year. It said it over-anticipated the growth in consumer demand for single purpose, black-and-white reading devices in the holiday.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

John Ribeiro

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?