Shares of Barnes & Noble Inc., the U.S. bookstore chain shifting to digital content, dropped the most since January after the company posted second-quarter revenue that missed analysts’ estimates.
The shares sank 11 percent to $14.26 at Thursday's close in New York for the biggest drop since Jan. 5. The decline wiped out this year’s gains, and the stock is now down 1.5 percent in 2012.
Barnes & Noble has been posting losses in the past two years as it spends on developing the Nook brand of tablet computers and e-books to appeal to consumers who are moving to digital content from printed books. Meanwhile the retail unit struggled with lower demand. Sales at the division, which includes stores and the website, declined 2.9 percent.
“The question is at what speed do the bookstores go out of business,” John Tinker, an analyst for Maxim Group LLC in New York who recommends buying the shares, said in an interview. “There is no question that people are going to buy fewer books. If you are a bear you think it’s immediate, if you’re a bull you think it will be over many years.”
Total revenue, which includes the college bookstore and Nook units, in the quarter ended Oct. 27 fell 0.4 percent to $1.88 billion, the New York-based company said in a statement. Analysts projected $1.91 billion, the average of estimates compiled by Bloomberg.
The Nook unit’s sales, which accounted for 8.5 percent of total sales, rose 5.6 percent to $160.3 million after being little changed and declining in the previous two quarters.
Revenue from devices doubled over the four-day U.S. Thanksgiving weekend. The gain in sales of Nook devices last weekend were driven by promotions at Target Corp. and Wal-Mart Stores Inc., the company said. Those chains stopped selling Amazon.com Inc.’s Kindle earlier this year.
The net loss in the quarter narrowed to 4 cents a share from 17 cents a year earlier, the company said. It was in line with the average of five estimates compiled by Bloomberg.
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