What many of us had predicted has finally happened: Barnes &
The company announced today in its fourth quarter and full-year earnings release that it will no longer be producing Nook tablet devices to focus on a "partnership model" where it distributes its content through apps on other manufacturers' devices and on e-readers.
While it might seem like a dire time for publishers and observers who were counting on Nook to be a counterbalance to Amazon and, now,
The company's retail segment realized $374 million in earnings before interest, taxes, depreciation, and amortization (EBITDA, a common measure of profit), an increase of 16%. The college bookstore segment EBITDA was down 4% to $111 million. That's about $485 million in profit on about $6.1 billion in revenues. Not exactly booming but fairly strong for an industry that's under attack from pretty much everywhere.
Meanwhile, Nook EBITDA was negative $475 million, bringing B&N back down to $10 million EBITDA on nearly $7 billion in profit. (Amazon-like, but not in a good way.)
What's
Barnes & Noble will continue to support Nook HD and Nook HD+ tablets and sell them at steep discounts, as has been the company's practice since its disastrous third quarter in which it failed to match its previous year's tablet sales even as all its competitors like Amazon, Apple, Asus, Samsung and many others made big advances. The sales will continue through the upcoming holidays and the support will likely continue but diminish over time as people stop using their Nook tablets.
At the same time, the company will pursue a more distributed model. It has already signed two such deals just this week. Nook apps will come pre-loaded on kids-focused Fuhu nabi tablets and also on E FUN Nextbook tablets. The company's joint venture with
The end of B&N's tablet business, which must have been extremely unprofitable, could help lift profits at the Nook division and overall company profits. With the retail and college segments showing all the signs of a slow growth, low profit business that a private owner could ride for a decade or more, and the Nook business not really looking like it will take off any time soon, one wonders how long it will be before we see Barnes & Noble founder, chairman and largest stockholder Len Riggio or some other private investor take the retail segments private and spin off the Nook business.
The company will have a conference call later this morning to discuss its results and future.
UPDATE: Barnes & Noble announces a three-pronged approach to moving forward. See the full report here.
Related: What Barnes & Noble Should Do Next -- Sell Nook, Go Private; Ingram Content CEO Says B&N Should Take Retail Private, Sell Nook to Microsoft
