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Barnes & Noble considering selling Nook business

Barnes & Noble Nook Tablet

Barnes & Noble said Thursday that it is evaluating the possible sale of its growing Nook e-reader and tablet business, which hit a record level of sales over the holiday season.

"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," said William Lynch, Barnes & Noble's chief executive, in a statement. "In Nook, we've established one of the world's best retail platforms for the sale of digital copyright content. We have a large and growing installed base of millions of satisfied customers buying digital content from us, and we have a Nook business that's growing rapidly year-over-year and should be approximately $1.5 billion in comparable sales this fiscal year."

"Between continued projected growth in the U.S., and the opportunity for Nook internationally in the next 12 months, we expect the business to continue to scale rapidly for the foreseeable future," Lynch said.

Shareholder's weren't particularly pleased Thursday with the idea of spinning off Barnes & Noble's Nook business into a separate company or selling the Nook unit altogether.

Shares of the New York-based company fell about 20% on the news of a possible spin off, which also came alongside word that the bookstore chain also expects "full year losses per share to be in a range of $1.40 to $1.10."

Holiday sales at Barnes & Noble retail stores rose 2.5%, to about $1.2 billion, over the last nine weeks of 2011 when compared with the same period in 2010. Meanwhile, during that period, sales of Nook devices and digital content rose 43% from a year earlier.

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."

As for how long Barnes & Noble will take to decide just what it will or won't do with its Nook unit, the bookseller isn't saying.

"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 is some mixed performance.

For the last nine weeks of 2011, digital content sales grew 113% from the same period 2010 and overall sales of Nook devices were up 70% from a year earlier, setting a new 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.

[Updated 5:19 p.m.: Barnes & Noble fell Thursday $2.32, or 17%, to close at $11.23 per share.]

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-- Nathan Olivarez-Giles

Nathan Olivarez-Giles on Google+

Twitter.com/nateog

Photo: Barnes & Noble Nook Tablet. Credit: Armand Emamdjomeh/Los Angeles Times

 
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