Forbes: Barnes & Noble's NOOK Bet Paying Off

[kjk]

http://www.forbes.com/sites/afonteve...les-quadruple/

The world’s largest bookseller, as the company labels itself, has put a substantial bet on its e-reader and digital business. It seems to be working, NOOK related business jumped 140% to $277 million while sales of digital content quadrupled. On-line sales soared 37% to $198 million.

Still no actual sales numbers, but great to see them growing. Very curious now what the sales breakdown is for the Nook vs. Nook Color though.

(If *all* that Nook related revenue were Nook Colors, that would mean around a million units last quarter)

edit: BusinessInsider reports that $277 million in revenue:

includes sales of Nook hardware -- the original Nook, Nook Simple Touch, and Nook Color -- plus content sales such as books, magazines, and apps.

[ilovejedd]

Originally Posted by kjk

Still no actual sales numbers, but great to see them growing. Very curious now what the sales breakdown is for the Nook vs. Nook Color though.

(If *all* that Nook related revenue were Nook Colors, that would mean around a million units last quarter)

Hmm, it'll certainly be interesting to know the breakdown of Barnes & Noble's hardware sales (e-ink vs LCD).

[kjk]

Originally Posted by ilovejedd

Hmm, it'll certainly be interesting to know the breakdown of Barnes & Noble's hardware sales (e-ink vs LCD).

I guess if they keep releasing both types, we can assume they are both doing reasonably well!

[afa]

As a Nook user and liker, I'm glad to hear that.

[boswd]

Originally Posted by afa

As a Nook user and liker, I'm glad to hear that.

me too

[fjtorres]

Originally Posted by ilovejedd

Hmm, it'll certainly be interesting to know the breakdown of Barnes & Noble's hardware sales (e-ink vs LCD).

It's easy to be an armchair analyst: just assume.
Like:
NookColor has more buzz and less competition but eink Nook is cheaper and was recently refreshed, so a 50-50 split is not unreasonable.
Typical new reader buyer is likely to buy, say, 10 books a year averaging $6, so Eink buyers contribute $200 to the gross and NC buyers about $320, including a couple apps. Average? $260 per customer for the first, current year. (I'm neglecting ebook sales to previous year and cellphone customers, of course; I'm using a small envelope.)
If the recent quarter ran $277 million, they're looking at about $1.2-1.3 billion for a year (XMAS bump, NC refresh), which works out to 4.6-5 million Nooks.
That's about 2.3-2.5 million for each type of reader.

Substitute your own ratios if you don't like those numbers.
Anyway you slice-n-dice it, Nook is a billion dollar business...
...Which is seriously dragged down by the B&M stores.

And note that Kindle grosses are high and average selling prices lower, so Kindle really and trully is selling north of 8 million a year.

And the two dwarf everybody else on the planet combined.
Plenty of room to grow, too.

[ilovejedd]

Originally Posted by fjtorres

Anyway you slice-n-dice it, Nook is a billion dollar business...
...Which is seriously dragged down by the B&M stores.

I dunno. Maybe the printed materials, yeah, but I think having B&M stores helped increase hardware sales of the Nook. I remember reading a post here where someone mentioned their local B&N having a little show-and-tell with the Nook.

[kjk]

Originally Posted by ilovejedd

I dunno. Maybe the printed materials, yeah, but I think having B&M stores helped increase hardware sales of the Nook. I remember reading a post here where someone mentioned their local B&N having a little show-and-tell with the Nook.

The big Nook display booth has been front and center at my Barnes and Noble store for months now-window displays as well. Seems pretty popular from the brief times I've seen it recently.

[ilovejedd]

Originally Posted by kjk

The big Nook display booth has been front and center at my Barnes and Noble store for months now-window displays as well. Seems pretty popular from the brief times I've seen it recently.

Actually, this was what I was thinking of:

NOOK Wi-Fi/NOOK 3G + Wi-Fi Class

NOOK Color Class

I believe having these in-store classes really help promote Nook hardware particularly for folks who aren't particularly tech savvy.

[Kali Yuga]

I hate to rain on anyone's parade, but....

Revenues != profits

B&N still lost money this quarter, to the tune of $56 million. This is an improvement over last quarter ($65 million in losses). They expect losses to continue. The recent investment by John Malone buys them about one more year at their current rate. (http://www.bloomberg.com/news/2011-0...tml?cmpid=yhoo)

I will say they at least seem to be losing some of that money for the right reasons, namely technology investment. (At least, I haven't heard much about recent store closures.) The questions are, how long can they keep sinking money into the nascent ebook business, how much of the revenue increases are at the expense of their physical stores, how are the same-store sales faring, how long can they keep stores open, how will store closures affect revenues / assets / public perception....

[RainingLemur]

Originally Posted by ilovejedd

Actually, this was what I was thinking of:

NOOK Wi-Fi/NOOK 3G + Wi-Fi Class

NOOK Color Class

I believe having these in-store classes really help promote Nook hardware particularly for folks who aren't particularly tech savvy.

The classes thing is a really neat idea.

[Red Alert]

It's amazing how companies can loose money year after year and still stay in business. Look to Amazon as an example. Do they now make a real profit? Look at the Airlines Industry? They claim losses yearly for over a decade...and yet still fly.

I haven't a clue what the tipping point is from losses to "Going our of business" signs.

[JSWolf]

You can have your nook class. I'll take one of our local B&N author event with Terry Brooks instead

http://store-locator.barnesandnoble.com/event/3114004

[fjtorres]

Originally Posted by Red Alert

It's amazing how companies can loose money year after year and still stay in business. Look to Amazon as an example. Do they now make a real profit? Look at the Airlines Industry? They claim losses yearly for over a decade...and yet still fly.

I haven't a clue what the tipping point is from losses to "Going our of business" signs.

Amazon first made a profit in 2001.
They made US$1.15 billion in 2010.
Wishful thinkers aside, it doesn't look like they'll be going out of business any time soon.
http://en.wikipedia.org/wiki/Amazon.com

[afa]

Originally Posted by Red Alert

It's amazing how companies can loose money year after year and still stay in business. Look to Amazon as an example. Do they now make a real profit?

Most definitely, and they have been doing so for a while.

From Wiki:

Amazon's initial business plan was unusual: the company did not expect a profit for four to five years. Its "slow" growth provoked stockholder complaints that the company was not reaching profitability fast enough. When the dot-com bubble burst, and many e-companies went out of business, Amazon persevered, and finally turned its first profit in the fourth quarter of 2001: $5 million or 1¢ per share, on revenues of more than $1 billion, but the modest profit was important in demonstrating the business model could be profitable.

While I don't have a year on year breakdown for the periods in between, I assume that they have been profitable ever since, which would mean 10 straight years of profitability. I don't recall reading about them incurring a net loss in years.

Their net income for 2010 was over $1.1 billion.