Tags: Barnes | Noble | Nook | Tablet

Barnes & Noble Launches Cheaper Nook Tablet

Tuesday, 21 Feb 2012 11:18 AM

Barnes & Noble Inc. posted a better-than-expected holiday-quarter profit, even as investments to keep its Nook e-reader competitive with Amazon.com Inc.'s Kindle hurt results.

The largest U.S. bookstore chain, whose shares were up 1.1 percent in early trading, also lowered the price on its Nook Color e-reader to $169 from $199.

Barnes & Noble also introduced a Nook Tablet that will cost $249, or $50 less than the first version, which was launched in November. The new Nook tablet will have half the memory capacity of the earlier version, but the same price and memory as Amazon's Kindle Fire tablet.

Barnes & Noble had already cut the price of the Color and other devices in November.

Barnes & Noble has had some success remaking itself as a digital bookseller. Its Nook business, including e-books and the devices, rose 38 percent to $542 million during the holiday quarter, which ended Jan. 28.

Companywide sales at stores open at least 15 months rose 2.8 percent, helped by physical book sales that rose 4.2 percent. It was the first holiday quarter since its former rival Borders Group shut down in September.

But the company faces a formidable, deep-pocketed rival in Amazon. That has forced Barnes & Noble to not only match its price cuts but also spend heavily on advertising and technology.

"The company continues to spend heavily on Nook," Morningstar analyst Pete Wahlstrom said, adding that the $50 cut on the Tablet was deeper than what was needed for a device with less memory, reflecting how tough the e-reader and tablet market is getting.

The loss before interest, taxes, depreciation and amortization for its online business nearly doubled to $93.7 million.

The bookstore chain has said Nook has a 27 percent share of the e-reader market.

Overall sales during the holiday quarter rose 5 percent to $2.44 billion.

Sales and gross profit at Barnes & Noble's chain of college campus bookstores fell, the only part of the company's business to do so. The college chain accounts for about one-fifth of overall sales.

Barnes & Noble maintained its forecast of full year company sales of $7 billion to $7.2 billion. The Nook business is expected to generate $1.5 billion in the fiscal year ending in April.

Last month, the bookseller cut its full year sales and profit forecasts because of Nook costs and said it may split off its digital books and e-reader business.

It also said at the time that sales of its touchscreen Nook had been disappointing.

Barnes & Noble reported net income of $52 million, or 71 cents per share, for the quarter, which ended on Jan. 28, compared with a profit of $60.6 million, or $1 per share, a year earlier.

Excluding items such as the dilutive impact of Liberty Media, Barnes & Noble earned 99 cents per share, while analysts were expecting 92 cents.

Shares were up 1.1 percent to $13.26 in morning trading.

© 2017 Thomson/Reuters. All rights reserved.

 
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2012-18-21
Tuesday, 21 Feb 2012 11:18 AM
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