Barnes & Noble CEO Resigns Unexpectedly, No Reason Provided

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Barnes & Noble CEO Resigns Unexpectedly, No Reason Provided
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This afternoon, after the market close, Barnes & Noble, Inc. (NYSE:BKS) announced the departure of William Lynch as CEO and director, effective immediately. No reason was provided for his sudden departure. Michael Huseby has been appointed CEO of NOOK Media and President of  Barnes & Noble, Inc. (NYSE:BKS). Mr. Huseby joined the company as CFO in March 2012 and also has experience in the media industry, having worked at Cablevision Systems and Charter Communications.

Barnes & Noble CEO Resigns Unexpectedly, No Reason Provided

 

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Max Roberts, CEO of  Barnes & Noble, Inc. (NYSE:BKS) College, will continue with the company’s digital education strategy and will report to Mr. Huseby. Mitchell Klipper will continue his role as CEO of Barnes & Noble Retail. Both Mr. Huseby and Mr. Klipper will report directly to Len Riggio, Executive Chairman.

In addition, Allen Lindstrom has been promoted to CFO of Barnes & Noble from his previous position as Vice President and Corporate Controller and will report to Mr. Huseby. Mr. Lindstrom joined Barnes & Noble in November 2007 from Liberty Travel. Kanuj Malhotra has been promoted to CFO of NOOK Media from his previous position as Vice President of Corporate Development. Mr. Malhotra joined NOOK Media in May 2012 from Affinion International.

Alan Rifkin an analyst at Barclays stated the following regarding the  Barnes & Noble, Inc. (NYSE:BKS) news:

We believe the sudden departure of Mr. Lynch, coming only three years after gaining the post underscores growing impatience on the part of the board and Mr. Riggio in particular in Barnes & Noble’s results over the past few years. Mr. Lynch’s departure, together with very poor results released just two weeks ago suggest that Barnes & Noble’s long-awaited turnaround is not imminent. In our opinion, Barnes & Noble has very formidable structural challenges facing NOOK Media and the retail business regardless of leadership.  Mr. Lynch was highly instrumental in making NOOK a centerpiece in Barnes & Noble’s broader operational strategy. 

With this announcement, Barnes & Noble is, in our view, signaling that it is attempting to reduce its dependence upon the NOOK as a long-term operational driver.  That being said, we note that Barnes & Noble has yet to announce a manufacturing partner who will take over the company’s NOOK hardware development. Until such an agreement is reached, Barnes & Noble is still exposed to what has continued to be a highly unprofitable manufacturing initiative. As such, we are maintaining our below-consensus EPS estimate of $(2.25) for fiscal 2014 and continue to be cautious on Barnes & Noble’s fundamentals. We continue to wait for further evidence of a partnership agreement before materially adjusting our estimates.

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