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!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
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

Father’s Day Gift Guide

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?