Shares of Barnes & Noble Inc. plunged 17% on Thursday after the book retailer said it was evaluating the possible sale of its Nook e-reader and tablet business.
The New York company also said that as a result of investments in growing its Nook business and slow sales of its $99 Nook Simple Touch e-reader — which competes with rival Amazon.com Inc.'s Kindle e-reader — it expects to post a loss for the year of $1.10 to $1.40 a share.
Barnes & Noble said it was considering spinning off the Nook business despite record sales over the holiday season.
Holiday sales at Barnes & Noble retail stores rose 2.5%, to about $1.2 billion, over the last nine weeks of 2011 compared with the same period in 2010. Sales of Nook devices and digital content rose 43% from a year earlier.
“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, Barnes & Noble’s chief executive, said in a statement.
But investors didn’t seem pleased Thursday with the idea of jettisoning the Nook business into a separate company or selling the Nook unit altogether. Barnes & Noble shares fell $2.31 to $11.24.
The company also said it was “in discussions with strategic partners including publishers, retailers and technology companies in international markets that may lead to expansion of the Nook business abroad.
“There can be no assurance that the review of a potential separation of the Nook digital business will result in a separation,” Barnes & Noble said. “There is no timetable for the review, and the company does not intend to comment further regarding the review, unless and until a decision is made.”
Barnes & Noble didn’t release specific sales numbers for Nook devices or for the sale of Nook e-books, apps and other digital content, but it did say that even in that segment of its company there was some mixed performance.
For the last nine weeks of 2011, digital content sales grew 113% from the same period in 2010 and overall sales of Nook devices were up 70% from a year earlier, setting a holiday record for the company.
But sales of the Nook Tablet “exceeded expectations, while sales of Nook Simple Touch lagged expectations, indicating a stronger customer preference for color devices,” Barnes & Noble said.