Why Barnes & Noble is considering separating the Nook from its business
Barnes & Noble says it had record sales on its Nook device but that the Nook Simple Touch sales numbers were less than projected.
Barnes & Noble's Nook Tablet device sales "exceeded expectations," according to a press release, though the Nook Simple Touch numbers weren't as high as expected.
Barnes & Noble surprised the public when the bookseller announced today that it was considering separating the Nook from its business.
“We see substantial value in what we’ve built with our Nook business in only two years, and we believe it’s the right time to investigate our options to unlock that value,” William Lynch, chief executive officer of Barnes & Noble, said in a press release.
Shares in the company went down more than 20 percent after the announcement. Some investors seem to fear that without the Nook device, which has sold well so far, Barnes & Noble would be less financially successful.
The press release from the company said that sales for its Nook Tablet device exceeded estimates. However, according to the press release, the Nook Simple Touch device did not sell as well as hoped.
It was because of the lower-than-expected Nook Simple Touch sales and the cost of promoting the Nook devices, said the press release, that Barnes & Noble would be decreasing the Nook sales forecast for the year from $1.8 billion to $1.5 billion.
Morningstar analyst Pete Wahlstrom told Reuters that the disappointing sales of the Nook Simple Touch are a sign that Barnes & Noble may be struggling against Amazon.
“They're going to have to raise capital for Nook if they want to stay viable," he said.
Lynch told Dow Jones that saying the Nook can't go up against Amazon's Kindle device or the iPad is a "rather ridiculous and simplistic way" to look at the competition.
According to the press release, Barnes & Noble does not have a timeline for the review of the possible decision to separate the Nook business from the company.
Molly Driscoll is a Monitor contributor.