Barnes & Noble Spinning Off Nook as Sales Fall

When the Nook e-reader was introduced in 2009 by Barnes & Noble, it was celebrated as the answer to Kindle, the popular Amazon.com e-reading device.

Over four years since that launch, the retailer continues to struggle and will shed the business it once thought to be its best hope to survive the evolving digital age.

This week, the company announced it was planning to spin off its Nook Media division, which also has the college bookstore part of the business.

The company is planning the spin off by the early part of 2015 and is betting that cutting itself into two separate pieces will ease shareholders concerns as its sales continue to fall.

Executives said that because of the losses from both are slowing down, now was the time to take action. The CEO of the retailer Michael Huseby said the company was encouraged by the two performances of the businesses.

Investors at the start cheered the decision, pushing up the company shares over 10% early Wednesday. However, that elation slowly ended and the stock was up just 5.3% at the close to $21.65 per share.

This decision is just the last twist for the Nook. The Nook devices at one period made up close to 25% of the market of e-readers.

Barnes & Noble brought Microsoft in and Pearson the publisher as minority investors forging strong partnerships that were intended to provide additional content and distribution.

However, last year, the company abandoned all expectation that its e-readers family and its tablets could compete credibly against the likes of the iPad and Kindle.

The failure of that is what eventually led to William Lynch’s departure who was the CEO prior to Huseby.

Instead of producing the hardware itself, the company chose to have it outsourced. This year, a partnership was announced with Samsung, which produces a Galaxy Tab that is specialized for the retailer.

The Nook part of the B&N business primarily became a catalog of digital media that was anchored by one of the large e-book catalogs that exists.

The fourth quarter results that were released this week showed that the company’s losses were cut close to 70% to end the quarter at $56 million. Revenues however continue to fall by 22% to end the quarter at $87 million for the same period one year ago.

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