Barnes & Noble cuts Nook loose
Barnes & Noble will cut its Nook loose, separating the floundering e-reader and struggling e-book business from its comparatively healthy brick-and-mortar stores.
The pending split, a long time coming, is now officially in the works. Barnes & Noble and Nook Media will be two different entities.
“We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately,” Barnes & Noble Chief Executive Michael P. Huseby said in a statement Wednesday.
The company’s board has approved the separation, which was announced along with its year-end financial results. Barnes & Noble’s fiscal year closed in May.
Barnes & Noble introduced the Nook almost two full years after Amazon launched its Kindle. Though e-books had been around for more than a decade by then, the introduction of the Kindle in late 2007 sparked a revolution, making e-books easy to buy via the device, which was swiftly adopted by the retailer’s most avid book buyers.
Amazon hoovered up readers most eager to buy e-books while Barnes & Noble failed to offer them an alternative. The Nook was finally announced in October 2009 and began appearing in December, but early adopters were punished when the company failed to deliver many of the devices in time for Christmas.
Despite the delays, the Android Nook devices received positive tech reviews. But after a healthy burst of purchases, sales of the device began to sink. In the last fiscal year, Nook losses were $218 million for the full year, while the company’s consolidated net losses were $47.3 million.
In other words, Barnes & Noble is turning a profit while its Nook is losing money.
Can Nook Media survive on its own? That is the question the new spinoff will face in March 2015, when the split from Barnes & Noble is expected to be completed.
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