On news of falling storefront sales, Barnes & Noble announced plans that may include creating a company solely for it’s Nook ebook reader business. While Amazon owns the best ebook to buy title, by virtue of it’s highest industry selling Amazon Kindle product line, the Nook is solidly in second place. Beating all other ebook competitors in sales over the last year.
Thursday, B&N shares dropped after the spinoff “plans” were announced. Stocks were hit particularly hard after revealing dismal brick and mortal sales throughout it’s U.S. locations. The company is reviewing its options for its growing Nook e-book reader business and might spin it off from its core bookstore business. Barnes & Noble has been investing heavily in electronic books and its Nook e-book readers as it faces face tough competition from online retailers and discount stores.
Increasingly dependent on revenue gleaned from it’s online products Barnes & Noble looking for better options. It seems that online business is growing at the expense of printed books as Barnes & Noble consumers increasingly adopt e-books. Spinning off the ebook reader business could either be a way to raise more cash for the investment capital that would be used to sustain growth. Some companies segragate profitable businesses in order to let the less profitable business “die”. Then a company can file for bankruptcy for anemic and less profitable business that is left.
While Kindle products have been selling at a torrid pace, Barnes & Noble reported lack luster sales for it’s Simple Touch e reader for $99.
Nook’s product line still has been selling well over the holiday season as sales are up 70 percent from a year ago. Corresponding digital content sales more than double for the same time period. The company projected Nook content sales for fiscal 2012 is $450 million and total Nook company sales to top $1.5 billion in revenues.
CEO William Lynch is saying the spin off could be seen as an attempt for more visibility on the successful Nook sales.
“We want to unlock value and shine a bright light on that business,” he said.
Some analysts expressed doubt on separating Barnes and Noble brand from the Nook product line.