updated 04:48 pm EDT, Tue August 20, 2013
Company chairman gives up on bid to separate Nook, retail arms
Amidst continued steep quarterly earnings for Barnes & Noble -- with more than double the losses it posted at this time a year ago -- Chairman of the Board Leonard Riggio has backed off of his plans to buy the company's retail arm, and separate the Nook Media aspect. During this morning's earnings call, the company reaffirmed its intention to continue designing and manufacturing monochrome e-book readers, and look to other companies for extensions of the color Nook line.
"While I reserve the right to pursue an offer in the future, I believe it is in the company's best interests to focus on the business at hand," Riggio said in US Securities and Exchange commission filing. "Right now our priority should be to serve the more than 10 million customers who own Nook devices, to concentrate on building our retail business, and to accelerate the sale of Nook products in our stores, and in the marketplace."
Barnes & Noble President Mike Huseby said in the earnings call that "when we discussed our fiscal year 2013 results this past June, the company announced its plans to stay in the device business, and continue to make black and white e-readers, while exploring and transitioning to a partnership model for manufacturing color tablets. Unfortunately many people interpreted these comments incorrectly, and concluded that we were getting out of the device business. I'd like to be very clear about this today: we want consumers to know that the company intends to continue to design and develop innovative Nook black and white and color devices. At least one Nook device will be released for the coming holiday, and further products are in development."
Regarding the color Nook lineup, Huseby said that "some kind of wholesale outsourcing of our color device business is neither appropriate, nor is it smart for the company. If we want to be in the content business, we need to be in the device business, no matter how they're produced. We think our people can produce better devices than anyone else."
Huseby admitted to the company having poorly assessed demand for the current Nook lineup, with the line facing a sales drop of 23.1 percent since 2012. "The problem is not the devices," he said. "The problem was that the decisions that were made by management quite frankly, in terms of the demand forecast, in terms of what was thought to be good information."
The company claims to hold a 22 percent share of the US e-book market, down from 27 percent six months ago. Barnes & Noble reported a net loss of $87 million for the quarter that ended July 27, compared with a loss of $39.8 million in the same quarter in 2012.