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Revenues and Losses Up for Nook

30 November 2012

From Digital Book World:

Revenues from its Nook device and digital content division increased by nearly $10 million in its second-quarter, but Barnes & Noble couldn’t stop the bleeding for the unit as it continued to pile on the losses.

While revenue increased for Barnes & Noble’s Nook to $160.3 million from $151.8 million in the same period a year prior, losses also increased to $51.4 million from $50.8 million a year ago. At the same time, digital content sales were up 38% versus the same quarter last year.

“We believe we maintained our healthy 25% to 30% share in digital books,” in the quarter, said Barnes & Noble chief executive William Lynch on a conference call discussing the earnings. On a related note, he estimated Amazon’s UK ebook market-share to be above 90%.

. . . .

Matching Amazon’s growth in Kindle unit sales, sales of Nook devices doubled over the “black Friday” holiday shopping weekend, Lynch said. These sales will be reflected in the company’s third-quarter earnings.

Link to the rest at Digital Book World

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13 Comments to “Revenues and Losses Up for Nook”

  1. 25-30%? Ha! This reminds me of Comical Ali declaring Baghdad safe as explosions fill the air and plumes of smoke rise behind him.

  2. “Another such victory, and we are undone.”

    Well, no, the trend is not actually that bad from what I can see. But it’s not great.

    I find it very Amusing that selling college textbooks is B&N’s main generator of free cash flow, or at least that’s strongly implied by the article. But then, I’m not currently in need of any college textbooks.

  3. So the ship’s not sinking as fast as they thought.

  4. Heh.
    No mention of the 3% drop at the B&M storefronts.
    And that 25-30% *ebook* sales? I read that as 25.1%. 😉
    (In other words: flat for the third year in a row. Their market share is “growing” with the market but not making much if any dent on the competition.)

    It’s not bad but not all that good either. They’re treading water…

    • Where does that market share figure come from?

      Google claim 8%, as do Sony. Kobo claim 10%. Apple claim 15 – 20%. Barnes & Noble claim 25-30%. And Amazon are said to have 60 – 65%.

      Something doesn’t add up, and I would trust that Amazon number far more than the others.

      • iPhingies may muddy the waters with people buying from more than one vendor? *beth would count all her ereader apps, but she collects those…*

        • I was wondering the same thing, David.

          I highly doubt B&N is that high. Plus, Nooks aren’t exactly readily available everywhere whereas all of the other product’s are…

      • Nobody knows the overall size of the e-book market, so all the percentage shares are guesses.

      • Up-front, I’d question Google’s numbers first. Doesn’t mean they’re not right but they’re generally bundled in with “other” in most estimates, thus implying lower-than-Kobo.
        Kobo themselves have only claimed high single digits: say, 7-8%.
        Apple? most reports I’ve seen peg them in Kobo-plus territory so 10% would not be out of the question.
        B&N has been reporting 26% for three years running. (Suspicious, right there.)
        Putting Amazon at 50% makes the numbers add up, more or less.

        The problem is there are clearly different basis for the estimates and a lot of the estimates come from BPH financials which brings in the issue of the “accuracy” of the BPH numbers in the first place and strongly deprecates the indies and self-pubs which are more prevalent at Amazon and less so at Apple and the ePub stores. Another problem in getting good estimates is that books without geo-restrictions are open to non-US customers from some US ebookstores, especially Amazon.

        The (undocumentable) reality probably has Amazon with a US share somewhat higher than their gadget market share (which is 55% of all reading devices) and everybody else slightly lower than their claims, depending on how dependent they are upon the BPHs for their sales.

      • The Economist has a droll look at the ongoing fights between Google-Apple-Facebook and Amazon.
        http://www.economist.com/news/21567361-google-apple-facebook-and-amazon-are-each-others-throats-all-sorts-ways-another-game
        Amidst the cutesiness, they quote Apple’s ebook market share at 5% and Amazon at two-thirds. That would most likely be global market share, I think.

  5. Cut them some slack, they’ve been putting in 150% effort at making a go of this.

    • Yes, and spending nearly 150% of the money they take in.

      • That does include their (belated) investment in setting up shop in the UK and the bloodbath they took with the Nook STR.
        The problem B&N faces with Kindle is that Amazon has been working on Kindle since 2004 whereas their competitors have, at most, been working on their ebookstores since 2008. Rush jobs cost more and cut corners that need to be fixed later, again at higher cost.
        And then, there is the price of competing with Amazon’s efficiency: Amazon has an overhead of 15% or so (if I remember correctly ffrom a 2009 filing I saw) versus B&N’s 25% (an improvement, actually, from ~32% before they bought the college stores). Factor in the “Adobe tax” and selling at prices comparable to Amazon and you get lower margins even before getting into hardware losses and international expansion.
        Another issue for B&N is their Fictionwise acquisition, which they are closing down now. It was at best treading water when they bought it and Agency prices gutted it so it has likely been bleeding them in a variety of ways; most recently, their effort to get FW customers to transition to Nook by transfering their FW licenses to Nook. Technically involved (not going well, either; so far) and probably not-cheap.
        And finally, B&N has put a lot of effort into rich content ebooks and magazines–especially children’s ebooks–which are, for now, low-volume sellers. A long-term play, there, but one that stresses their finances more than it would Amazon’s–and one Amazon itself isn’t pushing quite that hard.
        Add it all up and it’s easy to see why their finances are so iffy. They’re trying to do too much with too little and with a couple of boat anchors tied to their legs.
        Not to say that many of their problems aren’t self-induced but they *are* trying. 🙂

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