Barnes & Noble Took A Hit During The Holidays, Nook Suffered The Most
After the holidays, Barnes & Noble said that sales of its Nook hardware and eBook business were both starting to fall. In fact, Nook revenues reportedly dropped 12 percent in the time leading up to the holidays. Now the company’s third quarter results are out, and it’s not pretty.
Reuters reports that Barnes & Noble posted a net loss for its third quarter, which includes the holiday shopping season. Its retail business posted a 2.2 percent loss. That was nothing compared to its Nook business, however, as it took a massive $190.4 million, or 25.9 percent, loss.
Barnes & Noble founder and Chairman Leonard Riggio wants to buy the retail bookstore business, but he would leave the company’s Nook and textbook business to fend for itself. After splitting off the Nook business from its retail business, it received a few substantial investments from companies like Microsoft. It may need more of that to stay afloat until it can get its groove back.
Analysts are saying that will be difficult though. They call Nook’s ability to compete with Google, Amazon and Apple into question as its tablets lack many of the apps that make tablets from the former more popular. Morningstar analyst Peter Wahlstrom seemingly suggests that the Nook business should be sold, but says that “the window of opportunity” to do so is closing.
Despite all this, Barnes & Nobile CEO William Lynch says the company is still committed to its Nook business. What that means for the future of Nook, especially if Riggio is able to buy back the retail business, remains to be seen.
The most likely scenario to emerge from all this is Nook abandoning or selling off its hardware business, and focusing exclusively on its software/eBook business. Even then, the subsidiary could be bought up by somebody else for its massive selection of eBook titles. My money is on Microsoft as it needs to better equip Windows 8 in the fight against Apple, Google and Amazon. A collection of exclusive eBooks could be just the thing Windows 8 needs.