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What's Left if Barnes & Noble (BKS) Sells Its Retail Business? (MSFT) (PSO)

February 28, 2013 1:19 PM EST
If you take away the retail unit of Barnes & Noble (NYSE: BKS), what do you have left? No, really?

According to balance sheet data, NOOK is being cannibalized by offerings from rivals Google (Nasdaq: GOOG) and Amazon (Nasdaq: AMZN), not to mention the new, lower-cost Apple (Nasdaq: AAPL) iPad mini.

NOOK revenue fell 25.9 percent to $306 million in Barnes & Noble's fiscal third-quarter 2013 period. That outpaced a 10.3 percent drop in Retail and modest 1.6 percent decline in College.

With its quarterly call today, CEO Bill Lynch said that Barnes & Noble would offer more discounts on NOOK products to lure customers back in. Additionally, Barnes & Noble is taking steps to "right size" the company.

Earlier in the week, chairman Leonard Riggio disclosed plans to bid for the retail business of Barnes & Noble.

Potentially saving the company is the fact that Microsoft (Nasdaq: MSFT) and Pearson (NYSE: PSO) both have skin in the game. Microsoft has sunk about $300 million into the NOOK unit while Pearson made a $90 million investment two years ago. Given that NOOK saw at least 5.6 percent growth last quarter and 38 percent last year, there's still some hope that this quarter was a one-off event.

Shares of Barnes & Noble are up 7.4 percent Thursday.


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