Barnes & Noble could spin off the Nook

The Nook, Barnes & Noble's e-reader, has been a big success, while the rest of the business is suffering.

Tess Vigeland: Barnes & Noble did a little self-publishing this morning. It released its earnings and revenue predictions for the year and 'twas not a happy story.

The company slashed its forecast, and its stock price followed suit. But the bookseller also said it may be working on a new chapter for its e-reader, the Nook.

Sally Herships has more from New York.

Sally Herships: Barnes & Noble spent two years creating the Nook, its digital reader. Now digital books are booming. And today, the company said it may spin off the Nook.

Jim Milliot works with Publishers weekly. He says this will take another bite out of Barnes & Noble’s already struggling bookstore business.

Jim Milliot: But for Barnes & Noble, they want to stay in the book or digital content business, this is where you have to go.

And it’s going to be expensive to get there. Barnes & Noble is in the process of selling Sterling, its publishing arm. Milliot says B & N is hoping to raise around $80 million, all to bolster the Nook.

But remember, Barnes & Noble knows how to sell books -- not make electronics like the Nook. Peter Wahlstrom is an analyst with Morningstar.

Peter Wahlstrom: There’s a shell, there’s a screen, there’s a CPU or a processor.

He says the Nook needs the kind of expertise and attention required to keep up with big competitors like Amazon and Apple. Prashant Malaviya teaches marketing at McDonough School of Business.

Prashant Malaviya: Thee capability of the Nook is going to be significantly less than the iPad, so why buy a Nook?

Barnes & Noble says customers are buying. Holiday sales were up 70 percent over last year. And sales of the the color Nook tablet topped expectations. And Morningstar’s Peter Wahlstrom says even if B & N does spin off the Nook, the company still has more chapters left to write.

In New York, I’m Sally Herships for Marketplace.

About the author

Sally Herships is a regular contributor to Marketplace.
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"Prashant Malaviya: Thee capability of the Nook is going to be significantly less than the iPad, so why buy a Nook?"
The reason I purchased a Nook Tablet over the holidays was because it was the form factor I was looking for, did what I wanted, and was an acceptable price. The iPad does more than what I want, therefore costs more, plus isn't the form factor I was looking for.

By the way, where did marketplace dig up Prashant Malaviya? That has to be the stupidest quote I've heard on Marketplace in years. Kindle Fire and Nook Tablet are direct competitors with each other, not with the iPad which costs over twice as much, so try substituting "Kindle Fire" for "Nook" in the quote and check the Kindle Fire's sales compared to the iPad's if you want to see just how stupid that quote was. Marketplace, please talk to sources who have a clue.

I listen to Marketplace for the information, but it is truly annoying to listen to "reporters" who end their statements as questions, try to be dramatic, who are snarky, and who in general sound like they are down at the mall with the kids from "Glee". How about some maturity (that doesn't mean being old, it means being mature)? Sally Herships? Ky Ryssdahl? Tess Viglund? I ask you. What ever happened to reporting without trying to be cute? Again, the content is good, but the delivery, for the most part, is immature. The worst today was the Barnes and Noble report and Gigi's Alabama story. Content good. Delivery, not.

This is why people are buying the Nook Color. Why have just an e-reader when it's running an Android Tablet under the hood? I'm surprised this wasn't reported. There is so much out there (articles/YouTube videos) on how to 'root/jail-break' the Nook. it's not even a secret, google it. Some people will even sell you a chip to easily do this without having to be rooting-literate. you're welcome.
So-- B&N-- not sure it's a great idea to go this route---the cheaper kindles are now chipping away at the great $250 tablet deal I got with the Nook!

Mr. or Ms. Average Consumer wants a seamless and hassle-free ereading solution. Those of us who are knowledgeable and willing enough to spend a few minutes loading CM7 onto an SD card are in the minority. It's a fantastic solution but for most people it's not going to happen.

Having said that, the majority of reviews say that the stock Nook Touch, Nook Color and Nook Tablet provide a better experience than the comparable Kindles. I think two things are going on. First, B&N doesn't have a "with offers" subsidized Nook so when Mr. or Ms. Average Consumer compares the $80 Kindle to the $100 Nook Touch, guess which one looks like the better deal? And second, Amazon has marketed the Kindle, especially the Fire, much better than B&N has the Color or Tablet. This will continue to be a challenge for B&N no matter who makes their ereader, since Amazon has a free marketing opportunity to cross-sell a Kindle whenever someone is on their site buying music or a video game or a power tool or whatever, at the rate of 47 million customers a week.

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