Barnes & Noble Stands by Devices Despite Sharp Drop in Nook Revenue

By Steve Anderson March 01, 2013

New tablets weren't enough to keep Barnes & Noble's Nook sales from trending downward, but Barnes & Noble isn't prepared to throw the baby out with the bathwater.

Responding to its Thursday release of an earnings report that left many disappointed, Barnes & Noble has plans to shake the situation up, and hopefully turn it around.

These plans are said to keep devices right in the thick of things.

The earnings report showed that Nook revenue had plunged fully 26 percent, dropping the total down to $316 million. The biggest killer in that equation wasn't e-books – its sales actually rose 6.8 percent over the same time last year – but rather the devices themselves.

What was particularly telling is that the losses were incurred in the same period in which Barnes & Noble introduced two new Nook tablets, yet discovered that this still would not be sufficient to get users buying said hardware.

The remaining numbers weren't much better, as the company’s Q3 2013 fiscal year was marked by falling figures all around. Overall revenue was down 8.8 percent over the same time last year, reaching just $2.2 billion.

Meanwhile, the company recorded an overall loss of $0.18 per share, down from earnings of $0.71 per share just a year prior.

As for the brick-and-mortar side, that only looked slightly better. Retail sales were down $1.5 billion over the previous year – a drop of 10.3 percent – and Barnes & Noble didn't even discuss sales at BN.com.

This has led Barnes & Noble to announce plans that would see it "calibrating its business model," as well as implementing "a cost reduction plan that the company projects will significantly reduce Nook's expenses," in a bid to get Nook back on its feet. That's not exactly a good sign, especially in the wake of news that the company's chairman, Leonard Riggio, had plans to buy the retail operations and the website, but not the Nook Media arm, based on these reports – now something of a drag on the entire company's earnings picture.

It makes some sense that Nook earnings were down. After all, these aren't iPads or Galaxy Notes or the like, offering major advancements with every new version. These are tablets whose primary function is reading e-books, and those don't need regular optimization, and therefore, replacement.

Users surely regard their Nook tablets as "good enough" for the foreseeable future, and that's at least a contributing factor in keeping users from buying into the new releases. Naturally, reports emerged from Barnes & Noble to say the company was "committed" to the e-reader and tablet business – as though it could say any less – which served to shore up the company's position on that front.

Still, it's clear that Barnes & Noble needs to get expenses in line with revenue, and with revenue down, saving money is the name of the game. Repeat Nook purchases aren't exactly a sound business model, unless Barnes & Noble can put the kind of value into buying new models that other tablet models bring to the table. It's going to be interesting to see just what the firm ultimately does with its tablet line...as well as the rest of its retail operations.




Edited by Braden Becker

Contributing TechZone360 Writer

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