Faced with dropping e-reader sales, Barnes & Noble Inc. said Wednesday that it is spinning off its Nook business as a separate public company in an effort to boost shareholder value.
The split will be completed by the first quarter of next year, the company said.
The company also reported its fourth-quarter results, showing a drop in comparable sales at Barnes & Noble stores, in addition to continuing losses with the Nook. Revenue in the Nook unit fell 22% to $87 million. Digital content sales fell 19% to $62 million.
Barnes & Noble posted a fourth-quarter net loss of $36.7 million, or 72 cents a share, compared with a loss of $114.8 million, or $2.04, a year earlier. Revenue rose 3.5% to $1.32 billion, helped by the company's college business.
Analysts estimated a loss of 59 cents a share and revenue of $1.19 billion.
“We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of Nook Media and Barnes & Noble Retail,” Michael P. Huseby, the company’s chief executive, said in a statement. “We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately.”
The New York-based bookstore chain launched the Nook as an effort to compete with Amazon's popular Kindle electronic reading device. However, the company has struggled to boost electronic book sales along with its tablets and e-readers, even after bringing in Microsoft and publisher Pearson to help sell the e-reader.
The company's shares on Wall Street rose 5.6% to $21.71 shortly after the spinoff announcement.