Barnes & Noble, Inc. (NYSE:BKS) said it will exit manufacturing tablets and plans to implement a partnership model in an effort to significantly reduce losses in its Nook segment. The decision of the company demonstrates its retreat in the highly competitive tablet market.
The bookseller made the announcement in its fourth quarter and full-year earnings release. Barnes & Noble, Inc. (NYSE:BKS) reported that its consolidated revenues for the fourth quarter declined by 7.4 percent to $1.27 billion compared with its $1.38 billion results in the same period a year ago. For the fiscal 2013, its consolidated revenue was $6.83 billion, down from $7.12 billion in fiscal 2012.
Barnes & Noble, Inc. (NYSE:BKS) posted consolidated EBITDA losses of $118.6 million or -$2.11 losses per share for the quarter and $154.8 million losses or -$2.97 losses per share for the fiscal 2013. According to the company, its earnings result was due to the impact of its Nook inventory charges.
Barnes & Noble Weak Performance Causes Stock Drop of 20%
The weak financial performance of Barnes & Noble, Inc. (NYSE:BKS) together with its announced plan to exit manufacturing tablets caused its stock price to plummet by around 20 percent to $15.04 per share on Tuesday afternoon trading in New York.
The bookseller’s NOOK segment (devices, digital content & accessories) generated revenue of $108 million in the fourth quarter, down by 34 percent. Its fiscal 2013 revenue was $776 million, a decline of 16.8 percent. Barnes & Noble reported that the sales of its devices and digital content declined in the fourth quarter due to lower selling volume. However, the company stated that the full year sales of its digital content rose by 16.2 percent.
Although Barnes & Noble, Inc. (NYSE:BKS) will no longer manufacture tablets and decided to create a partnership model, in order to continue designing eReading devices and reading platforms. The company said it will continue in-house development of its popular lines of Simple Touch and Glowlight. The bookseller said that its models for tablet devices will be co-branded with third party manufacturers.
Building Digital Content, Still Strong in College Sales
Barnes & Noble, Inc. (NYSE:BKS) said that it is adding thousands of eBooks every week and launching new NOOK Apps as it continues to build its digital catalog. The bookseller said it will continue to sell and support its NOOK HD and NOOK HD+ devices.
The retail and college business segments of the bookseller delivered $948 million and $252 million revenues, respectively in the fourth quarter. Revenue from the retail segment declined by 10 percent while comparative store sales of its college segment increased by 7.5 percent.
William Lynch, CEO of Barnes & Noble, Inc. (NYSE:BKS) said, “We are taking big steps to reduce the losses in the NOOK segment, as we move to a partner-centric model in tablets and reduce overhead costs. We plan to continue to innovate in the single purpose black-and-white eReader category, and the underpinning of our strategy remains the same today as it has since we first entered the digital market, which is to offer customers any digital book, magazine or newspaper, on any device.”
