Barnes and Noble Financials

[kennyc]

Barnes & Noble sales light on Nook returns


(Reuters) - Barnes & Noble Inc (BKS.N) reported lower-than-expected quarterly sales as its Nook e-reader business was hurt by discounts as it competes with Amazon.com's (AMZN.O) Kindle franchise.

The company did not give any forecast for the current fiscal year's financial results and its shares fell 7.2 percent, or $1.10, to $14.17 in early trading.

"That's what kind of spooks investors here," Morningstar analyst Peter Wahlstrom said about the lack of a forecast. "We don't have much to really grasp on to."

Barnes & Noble has poured hundreds of millions of dollars into developing Nook, helped by well-reviewed devices including a glow-in-the-dark Nook, allowing it to garner some 27 percent of the U.S. e-books market in the 2-1/2 years since the reader was launched.

But that compares with Amazon's 60 percent, and in January, the retailer acknowledged slower-than-expected sales of devices like the black and white Nook Simple Touch.

The company's sales were hurt by returns of the device from retailers during the fourth quarter, which is typically the slowest sales quarter for Barnes & Noble.

Revenue for the quarter was $1.38 billion, up slightly from a year earlier, but below the average analyst estimate of $1.48 billion, according to Thomson Reuters I/B/E/S.
....

http://in.reuters.com/article/2012/0...85I0WD20120619

[RainingLemur]

Ouch. That's not good for B&N.

[fjtorres]

Not much of a surprise, though.
We knew they were up to their gills in STRs since the holiday season and you don't do BOGO deals with products that move on their own.
They certainly didn't help themselves much by burying the STR with the Nook Glow.
Flat reader adoption in the US + zero international presence + bad inventory management = Thank God for Microsoft's money.

Otherwise, we'd be looking at a Chapter 11 reorg by now.
The NewCo spinoff can't come fast enough now.

[QuantumIguana]

A friend of mine had a Nook. If he would have had good things to say about Barnes and Noble, I probably would have purchased a Nook as well. Instead, he had problems with it, and B&N's customer service was no help at all. He went into the store and talked to the manager. The manager called customer service, but even the manager couldn't get customer service to cooperate. The manager finally gave up screaming at customer service, and handed my friend a new Nook from the shelves.

He then returned it and bought a Kindle. I've heard nothing but good things about Amazon's customer service. The horror stories about Barnes and Noble's customer service turned me off. Perhaps Barnes and Noble's customer service has improved, I don't know. If it hasn't, they are really squandering the advantage of having a physical presence.

[stonetools]

Its not all bad for BN.

Digital content sales — e-books, digital newsstand and apps — were up 65 percent for the quarter and 119 percent for the year, “growing comparable digital content sales to $483 million for the full year.” Digital content sales weren’t broken out for the quarter.”

However, agency pricing might account for that. Post-DOJ settlement, BN may be less competitive in digital sales vs. Amazon.
It looks like BN reading devices may be going the way of the dodo bird. Maybe Microsoft will take over future development of the Nook Tablet. Don't see them investing in e-ink devices though.

[tubemonkey]

Originally Posted by stonetools

Maybe Microsoft will take over future development of the Nook Tablet.

That's an idea, since they don't have a consumer tablet of their own.

[SensualPoet]

For B&N's Q4 2011 vs Q4 2012 (ending Apr 28) there was a majo differnce: although it operates 600+ reail stores, it was staring down a competitor (Borders) that at the time had 400+ stores. Since last summer, Borders has disappeared. You would think that previous Borders customers would give SOME lift to sales for Barnes and Noble. But, you'd be wrong. The comapny generated 0.4% (less one one-half of one percent) higher sales, year over year.

Nook division sales were DOWN to $164 million from $183 million. Of the $164 million, only $1 million represented "gross profit" and it cost them $78 million to sell that stuff ... for a net loss of $77 million. Nook division incorporates hardware and content sales related to Nook. This division is a huge sinkhole. And it is supposed to be the engine of growth that Microsoft wants a piece of.

It is not hard to understand why Liberty Media back away from buying the comapny last year, opting for a $200 million preferred share investment. Those shares can be converted to voting shares at $17 each (ie abt 11.7 million shares). The stock is currently trading at $14.30 so that's a pretty rotten deal.

Plus management apparently refused to give guidance for 2013. While some folks think B&N will be saved by embarking on an international investment program, it seems they really need to figure out how to make money at home first and build upon what, on paper, look like pretty good assets: good share of US ebook sales, the leading retail chain for paper books, a captive college audience on campuses, a celebrated eink and ereader tablet competitively priced ... but every quarter they can't seem to make the numbers work. This can't go on forever, even with angel investments from Liberty and Microsoft.

[Timoleon]

Originally Posted by tubemonkey

That's an idea, since they don't have a consumer tablet of their own.

...not so fast...

[fjtorres]

Originally Posted by Timoleon

...not so fast...

It is literally true, right now.
Wait a quarter or so and it'll be a whole new ballgame.

[tubemonkey]

Originally Posted by fjtorres

It is literally true, right now.
Wait a quarter or so and it'll be a whole new ballgame.

Are they planning on another tablet besides the Surface?

[fjtorres]

Originally Posted by tubemonkey

Are they planning on another tablet besides the Surface?

There are *two* surfaces, you know.
The WindSurf RT model is consumer focused. (Hint: bundled Office *HOME AND STUDENT*.)

There's more to the consumer market than just media consumption.
(Though the RT Surface will do that two, with its bundled SmartGlass app.)

http://www.xbox.com/en-US/live/smartglass

The RT model is most likely coming with bundled Nook app too; they paid a nice chunk of change in return for a slice of the ebooks sold through it so they might as well use it.

[kennyc]

Originally Posted by tubemonkey

That's an idea, since they don't have a consumer tablet of their own.

[tubemonkey]

Originally Posted by fjtorres

There are *two* surfaces, you know.
The WindSurf RT model is consumer focused. (Hint: bundled Office *HOME AND STUDENT*.)

There's more to the consumer market than just media consumption.
(Though the RT Surface will do that two, with its bundled SmartGlass app.)

http://www.xbox.com/en-US/live/smartglass

The RT model is most likely coming with bundled Nook app too; they paid a nice chunk of change in return for a slice of the ebooks sold through it so they might as well use it.

I know there are two models, but even the cheapest one is priced way above the average consumers liking. Comparably priced 32GB and 64GB means a price tag to match the iPad. In other words, $600 and $700 for WiFi; and $700+ and $800+ for cellular models.

[Sydney's Mom]

I don't understand how the 4th quarter can be their slowest. I have given more kindles as gifts than anything else.

[taming]

Digital Book World had a different spin on this: http://www.digitalbookworld.com/2012...ontent-up-119/

Revenue at Barnes & Noble was $7.1 billion for fiscal year 2012, an increase of 2% for the nation’s largest bricks-and-mortar bookseller. Earnings before interest, taxes, depreciation and amortization were up to $171.4 million, an increase of 5%, but the company still took a loss for the year overall of $68.9 million.

Flat results aside, the company’s focus is now on how to realize the potential of its Nook business, which it split off into a new partnership with Microsoft earlier in 2012 as the tech giant made investments in the new entity that will total $605 million over five years.

“In digital, our Nook content sales continued to explode with 119% year-on year growth,” said Barnes & Noble CEO William Lynch in a statement. “In the quarter we also announced a historic new partnership with Microsoft that will include a significant investment in Newco, and that will capitalize the company to fuel continued growth in digital and international expansion.”

For 2012, the Nook business took in almost $1 billion in revenue, clocking in at $933 million, a 45% increase over the previous year. Digital content sales on the Nook were $483 million for the year, up 119% versus last year.

Meanwhile, retail sales, which now includes sales from BN.com as well as the bricks-and-mortar stores were $4.9 billion for the year, down 1.5% versus last year but still the bulk of Barnes & Noble’s revenues. Bookstore sales were up 4.5%, but BN.com sales continue to decline, the company said. The college bookstore segment’s sales were down to $1.7 billion for the year, a decrease of 1.9%.