Wall Street sent Barnes & Noble (NYSE:BKS) shares falling more than 17 percent on Tuesday (June 25), after the latest quarter reported weak sales and a net loss that was more than double that of a year ago.
The chain blamed the decline of e-book sales partly on the tough comparison from a year ago, when "The Hunger Games" and "Fifty Shades of Grey" trilogies boosted results.
In the broader e-book market from the largest publishers, Barnes & Noble has said it has about 25 percent of content sales. But it admitted that figure has been under pressure from Apple Inc. and Amazon lately. "We're holding our own, but it's declined slightly," said Michael Huseby, chief financial officer.
And the future didn't look much brighter. Barnes & Noble reported "For fiscal year 2014, the company expects Retail comparable bookstore sales to decline in the high-single digits on a percentage basis. College comparable store sales are expected to decline in the low-single digits on a percentage basis."
The chain also announced it was stopping its color Nook tablet sales, as a way to try to cut losses. But the tablet change could also help the chain sell its stores, Bloomberg reported.
Since Barnes & Noble got into the tablet business in 2010, analysts questioned how it would maintain its initial success because the amount of investment to churn out devices to compete against the likes of Amazon.com Inc. and Apple Inc. would be difficult for a company of its size and acumen, Bloomberg said. This decision removes those hurdles, which could help make the Nook more viable on its own or as an acquisition target.
"It's a positive because anything they can do to cut back on that cash burn is a good thing," Michael Souers, an analyst for Standard & Poor's in New York, told Bloomberg. "That definitely has to be seen as a good thing and could potentially help find a buyer for Nook Media." That, in turn, could allow founder Leonard Riggio, the company's largest shareholder, to go ahead with his February proposal to buy the chain's retail arm.
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