UPDATE: Barnes & Noble (Probably Not) Ditching the Nook
Photo STILL courtesy of Delilah S. Dawson
Via: Wall Street Journal
Speculation over a company's decisions can cause a lot of bad press, and we're sorry to report that we got caught in the mix.
Recently we ran a story about Barnes & Noble and the future of their Nook product. Originally, it was believed that the Nook was on its way out, however, that's actually not the case. B&N's official position as of now is that they are still in a state of consideration, i.e. nothing's official yet. Here are the hard facts of what's going on with that particular product and the overall company:
-On Thursday (01/05) Barnes & Noble stock fell 17%. This puts the company in one of the most critical states it's yet to experience.
-They control approximately 27% of the digital book market, citing that they, "...saw more growth with e-books with Barnes & Noble this Christmas than anybody else."
-Regarding the aforementioned sales increase: this came at a cost of up-front expenditures. Namely, developing, manufacturing and promoting the eReaders and tablets. They even went back to TV advertising after a 14-year absence. Since 2009, B&N has tripled their advertising budget, and this has subsequently put a strain on their bottom line.
-On Thursday, Barnes & Noble increased its projected loss per share for the current fiscal year to between $1.10 and $1.40, from the 30 cents to 70 cents it reaffirmed one month ago. We reported earlier that the shareholders weren't happy and this is one of the main reasons why. B&N is blaming this on an unexpected shortfall of sales of the Nook Simple Touch e-reader. Nook Color did very well as consumers continue to embrace products like that one and the Kindle Fire.
-Now here's where some major clarifications come in regarding the Nook: Barnes & Noble said in a statement on Thursday it was "in discussions with strategic partners including publishers, retailers and technology companies in international markets." One possibility here is that B&N could sell a minority stake of the Nook product for public offering, and so B&N would still be closely involved with the Nook product. The other possibility is that they sell the Nook arm of their business off outright. Again, no decision has been made, but we'll update when the verdict is made available.
-Edward Latessa, a portfolio manager for Aria Partner, estimates the Nook business being worth around $1.5 billion.
Via: The Examiner
It's a good thing Jane Lynch already got her paycheck for doing that cheesy Nook commercial, because that particular tablet is going the way of the dodo, my friends. After announcing that their year end numbers were 'much lower than expected' (a polite way of saying: bad), Barnes & Noble is scrambling to make investors happy with a little damage control, and the Nook is going to be one of the casualties.
Don't cry for them, Argentina. This tablet war between the Nook, Kindle, and iPad was basically an unfair version of Risk from the get-go. Cheers to them for holding on to what little piece of real estate they had while Apple and Amazon set record numbers. There simply wasn't enough room on the board for all of them, and Barnes & Noble found itself isolated in the Ukraine surrounded on all sides.
The funny thing about this is that Barnes & Noble actually considered selling off the Nook tablet right around the time Borders was filing for bankruptcy. Instead, they chose to accept more money from investors (John Malone and Liberty Media) in order to make the line successful. Bad play on their part. Sales of the new $99 Nook eReader fell way short of their predictions and now the investors are all hot and bothered.
In other sad news, as part of their scramble to get their money right, B&N has announced it's cutting its Sterling Publishing branch and putting it up for sale. Yes, you read that right: their print gardening line is going bye-bye.
Opinion time: is Barnes & Noble in a chokehold or what?
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