Barnes & Noble

Lots of rumors were flying last night about a split of Barnes & Noble. It’s now been confirmed through an SEC filing that Len Riggio, current CEO of B&N, wants to buy the retail stores and Nook Media and the college bookstores will remain a separate entity under current corporate leadership; Riggio doesn’t want ’em.

I can’t imagine that this will end well. Many of the college bookstores are also retail stores (like the one at my son’s college, Virginia Commonwealth University). Will there be separate retail terms for each entity? If so, that would be horribly inefficient.

And how will Nook Media be sold if not from the website? Will there be two separate sites, one for physical books and one for e-books and apps? (Assuming, of course, that Nook devices even survive this move.) B&N already has an online presence that is inferior to that of Amazon. Two sites would only make it worse for consumers.

I’ve always championed Barnes & Noble as a competitor to Amazon. Not because I don’t like Amazon—I do—but because competition is good for me as a consumer. I don’t think this move is good for either competition or consumers.

Might be time to back up my Nook content. Nook may be going the way of Fictionwise soon.


  1. Not only is spitting off B&N and Nook a good thing, it is the one sure way to make sure they don’t *both* crash and burn together.
    Doesn’t mean they won’t crash and burn individually (if they keep the same management and policies) but together they are keeping each other from doing what they each need to survive.
    Take the stores: reports are, they are running at breakeven or slight losses overall. And that is after carving out decent front-and-center chunks to spotlight Nook. Plus staff needs to be trained to try to sell Nook and ebooks to people who walk in looking for pbooks. Most businesses that feature that kind of store within a store are usually *paid* for the floorspace. There are also anecdotal reports of people walking into B&N, seeing the Nook section and then run screaming to the nearest indie bookstore. 😉
    (Hey, luddites are going to be a core consituency for pbooks, moving forward.)
    More seriously, the reduction in pbook floorspace to make room for Nooks and “lifestyle” merchandise has not only resulted in less revenue but, worse, less traffic.

    Nook media, on the other hand, has been so reliant on B&M sales to move readers that they refused to even try to go international. More, while early on they were licensing 3rd party hardware to access their ebookstore (Pandigital for one, if I remember right) they stopped and tightened their grip.

    The NYT report said it best: they have been too reliant on the B&N brand and customer base and when it comes to consumer electronics B&N is a “small” brand but they act as if they were one of the big boys. And they don’t have the money or reach to play with the big boys; Apple, Google, Samsung.
    Money quote:
    “In many ways it is a great product,” Sarah Rotman Epps, a senior analyst at Forrester, said of the Nook tablet. “It was a failure of brand, not product.
    “The Barnes & Noble brand is just very small,” she added. “It has done a great job at engaging its existing customers but failed to expand their footprint beyond that.”

    Too much of the Nook business comes from B&N loyalists and Amazon-haters. That was an easy sale to ramp up but to hit that broader market and, above all, the international markets they’ve neglected, they need to reach beyond the loyalists; relying on the B&N brand buys them nothing in those markets.

    So yes, breaking the two operations apart and letting them focus on their core businesses (like Indigo did with Kobo) is probably a good thing.
    And overdue.
    They really should have done it last summer, after the MS investment had Nook Media valued at $2Billion. That valuation is likely going down come thursday.
    They cost themselves big money waiting.

    Now the question is whether Riggio can cook up a deal to take B&N proper private. He’s tried before…

  2. Oh oh, should we be dumpong our NOOKS now? Seems the market has been saturated for these devices anyway, and while the Nook is a good product, it has not gained any traction from what I can sense. I lost ebooks before from B&N (remeber they carried Microsoft eBooks once?), is this yet another round of loss coming for buyers of ebook product from them? Sad, but the book world is floundering, and B&N isn’t helping.

  3. @Felix
    ‘Take the stores: reports are, they are running at breakeven or slight losses overall’

    This is not correct, as (to take just one source):

    “Credit Suisse expects the e-book division to lose $300 million this year, on top of $262 million in losses last year.”

    “In contrast, the stores generated $317 million in earnings before interest, tax, depreciation and amortization, or Ebitda, in fiscal 2012.”

    And again:”Without profits from the bookstores, Wall Street doubts that Nook Media — which includes the company’s college-store chain and the Nook e-reader business — can survive on its own.”

    ‘“Left alone, even with cash, will that business make it on its own, or is taking out the positive cash flow of retail … a death knell for Nook Media?” Credit Suisse wrote.’

    Riggio appears to have decided that enough is enough, the Nook ballast will sink his ship if not jettisoned soon. The Nook as hardware is probably finished, though one more update could still be in the pipeline.

    Now we can all start speculating as to who would want to buy an industry losing $250 – $300 million a year.

  4. @Willem, I’ve seen those numbers.
    I’ve also seen numbers *after* debt service and other sundries are factored in. Debt acquired *before* Nook was launched. Debt which Riggio is *taking* along with the storefronts in his proposal.
    B&N as a whole was losing money long before Nook and, absent significant change, they’ll likely continue those losses after Nook.

  5. @Felix

    Well now you’ve aroused my curiosity. I’ve not slogged through B&N’ financials – who would want to – but just by looking at, say,
    it would appear they were in the black until fairly recently.

    I also believe Riggio is actually Barnes & Noble’s biggest creditor, given that B&N bought the College division from him, just before their Nook misadventure if memory serves. He wll probably try to use that to reduce the amount of cash he needs to make an offer to buy out the minority shareholders. Len’seen preparing for this for some time methinks.

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