Wal-Mart Should Buy Barnes & Noble’s Struggling Nook Division

5 December 2014

From The Street:

Since his promotion to CEO of Barnes & Noble  in January 2014, Michael Huseby has been preparing the struggling Nook digital media division for sale, but so far no suitors have shown themselves. Huseby should look no further than the world’s largest retailer, Wal-Mart Stores .

Wal-Mart has been steadily investing in and growing its digital businesses and needs to find more ways to compete with Amazon. While Nook has been failing since 2012, it still has underlying assets — a catalog of millions of e-books, thousands of relationships with publishers and suppliers, and a robust self-publishing services business — that would be valuable for a company interested in investing in e-books and would be hard to build from scratch.

. . . .

“It is definitely a good idea if Wal-Mart cares about being in the book business or the digital media business long term,” said book publishing consultant Mike Shatzkin. “If that’s a priority for them, acquiring Nook would probably be the cheapest way to ensconce themselves in the game.”

With Nook, Barnes & Noble was once solidly the No. 2 e-book retailer in the U.S., behind Amazon, with a reported 25% market share to Amazon’s 65%. That was in 2012, when Nook revenues eclipsed $900 million and then-CEO William Lynch charted a course to reach $1 billion in annual revenue.

The plan involved Nook continuing to sell more Nook devices in the growing tablet business, as well as selling more e-books on those devices and increasing digital content sales across the board.

Neither of those things happened.

. . . .

What’s next for Nook?

Barnes & Noble has said that spinning off Nook as a separate public company is also an option to exit the business. With a consistent track record of losses and declining revenues, it’s not a very good one.

Instead, Barnes & Noble should sell Nook to Wal-Mart.

According to one source who did not want to be named, the big retailer is exploring entering the e-book business. Buying Nook would be an easy and inexpensive way for the company to do so. Wal-Mart declined to comment.

Like many Amazon competitors, Wal-Mart has been trying to expand in digital. It expects its e-commerce sales in 2015 to increase to $12.5 billion after accelerating its digital investments to between $1.2 and $1.5 billion, up from $1 billion in 2014.

While $12.5 billion is nothing to sneeze at, it’s a fraction of Amazon’s projected 2015 revenue, which will eclipse $100 billion. And it’s less than 3% of Wal-Mart’s $473 billion in sales in 2014, which are expected to grow 2% to 4% in 2015.

A Wal-Mart spokesperson said that funds for digital acquisitions would not come from its capital expenditures on digital expansion and pointed out that the company has made 14 e-commerce acquisitions in the past several years.

“We are open to acquisitions if they fit into our enterprise strategy,” the spokesperson said, via email.

Nook “is a nice fit with Wal-Mart’s print book business,” said James McQuivey, a vice president and principal analyst at Forrester focused on the book publishing industry. “They could probably also get it for a decent price.”

To be sure, there are significant risks. In the U.K., retailers Tesco and Sainsbury both launched e-book businesses, but Amazon still has about 90% of the market.

Link to the rest at The Street

PG says if Big Publishing thinks Amazon is tough when negotiating contracts with suppliers, they’ll gain some perspective on that subject should Wal-Mart enter the ebook business.

Barnes & Noble, Microsoft End Nook Pact

4 December 2014

From The Wall Street Journal:

Barnes & Noble Inc. said it has terminated its commercial agreement for its Nook e-reader with Microsoft Corp. , a move it said provides a clearer path toward the impending split of its business.

The bookstore retailer bought out Microsoft’s preferred interest in Nook for about $120 million in cash and stock, freeing Microsoft from further investments in the business.

Barnes & Noble, struggling to adapt as book buyers migrated to online retailers like Inc., said Thursday that it expects the planned split of its Nook Media unit from its retail stores to occur by the end of August, behind its initial projection for a separation by March.

The company also reported a much weaker-than-expected profit for its November quarter, helping push its shares down about 8% premarket.

Microsoft invested in Nook in 2012, pledging more than $600 million to help prop up Barnes & Noble’s digital-reading business.

. . . .

For its second quarter ended Nov. 1, the Nook segment’s revenue fell 41% to $63.9 million, while digital content sales fell 21% to $45.2 million. Device sales fell 64% from a year earlier, though cost-cutting helped stem the division’s loss in the quarter.

Sales at the company’s retail unit, meanwhile, fell 3.6% in the quarter, due partly to store closures.

Link to the rest at The Wall Street Journal (Link may expire)

Barnes & Noble jumps into print-on-demand

12 November 2014

From Geekwire:

In a move to pick up more self-publishing clients, Barnes & Noble has launched Nook Press Print, a new print-on-demand service for independent authors looking to take their manuscripts into the physical world.

Users can pick from a variety of materials and formats, including hardcover and softcover books, in a number of different sizes. Authors can get their texts published in full color or black and white, and select different paper materials.

. . . .

It’s a move to attract people to Barnes & Noble’s publishing platforms at a time when the bookstore chain is feeling increasingly challenged by Amazon. The company plans to break off the Nook division into a separate company, and is now outsourcing the production of its latest tablet to Samsung.

Amazon already offers print-on-demand services through two of its subsidiaries: Booksurge and CreateSpace, which offer similar options to those offered by Nook Press Print. The Seattle-based retailer’s existing ecosystem of self-published authors is a lucrative business for the company: there have been a number of hit books which started as self-published titles on Amazon, like “The Martian,” which exploded in popularity and was recently got picked up for a film deal.

Link to the rest at Geekwire and thanks to Shelton for the tip.

Here’s the link to Barnes & Noble’s announcement

If PG were running Nook, he would have spent money on major improvements to the website instead of POD. Being able to list and sell POD books on the Nook website won’t do much good if potential readers can’t find them.

[Update] You can’t list and sell your POD books on the Nook website. You’ll have to go to another POD service if you want to do that.

Then there are the add-on packages that begin at $999 and immediately caused PG to think of Author Solutions.

Why NOT self-publish exclusively through Amazon?

20 September 2014

From TeleRead:

Essentially, Amazon provides a number of added benefits and incentives to writers who publish exclusively via Amazon either temporarily or continually: free giveaway days, or inclusion in e-book subscription services such as the Kindle Owners Lending Library or Kindle Unlimited that pay a fee per checkout, for example. Amazon has allowed some top-selling authors, including Howey, to try the service out temporarily withoutgoing exclusive to see how the numbers stack up.

After a couple of months, Howey reports that the readership gains he’s seen from Kindle Unlimited “more than covered the readership I gain from the iBookstore, Nook, and Kobo combined.” He might be earning slightly less money, he writes, but gets considerably more fans out of it.

. . . .

I’d love to see some decent competitors to Amazon spring up, but at the moment, nobody really seems to be even trying to compete. Apple locks its books into one specific platform—and what’s more, it even requires writers to use that platform only if they want to upload their books directly rather than via an intermediary!

. . . .

Sony’s thrown in the towel. Barnes & Noble’s just taken a major step backward in consumer-friendliness. Kobo…well, the most I can say about Kobo is that I haven’t heard about them doing anything overtly stupid lately, but I haven’t heard about them doing anything especially smart lately either.

. . . .

The only answer I can come up with is to try to keep limits on Amazon’s power by supporting its competition. But is that really Howey’s job? Why should he be obligated to support a bunch of lackluster companies who don’t even seem to be interested in trying to compete themselves?

Link to the rest at TeleRead

B&N Removes Download Buttons from Website, Stranding Millions of Customers’ eBooks

19 September 2014

From The Digital Reader:

Reports are coming in from multiple sources today that Barnes & Noble is locking down the Nook platform.

Nook customers on MobileRead Forums and on B&N’s own support forums are reporting that the download buttons for their Nook ebook purchases are no longer present in the My Nook section of the B&N website. These buttons enabled readers to download a copy of their ebook and transfer said ebook to another app or device. (While B&N is known for having mutant DRM, there are a number of apps that support it.)

Many of the reports echo this post from MobileRead:

I have a Sony, Kobo, and Nexus tablet, but not a Nook. I have purchased books from B&N in the past (mostly due to some good sale prices) and they have the books I purchased from Fictionwise there (I think it was Fictionwise. It was one of the multitude of now closed stores anyway).

It seems they have suddenly removed the “download” option from all of the books in my library.

Link to the rest at The Digital Reader and thanks to Christopher for the tip.

The Bookseller to preview indie titles

18 September 2014

From The Bookseller:

The Bookseller is to preview self-published titles from October, and has partnered with US bookseller Barnes & Noble to exclusively include Nook Press titles in the section through to April 2015. The new preview will give independent authors the chance to showcase their work and recognises the role of non-traditional channels to publication.

The “Independent Author Preview” will feature around 10 titles each month, from a selection exclusively supplied to The Bookseller by Nook Press, B&N’s self-publishing platform. The new preview will sit alongsideThe Bookseller’s respected previews, including New Titles, and Paperback Preview.

. . . .

The Bookseller editor Philip Jones said: “Our goal here is to discover the best new books published independently and made available to customers in the UK and we’re thrilled to have partnered with Nook Press. This is a new spin on what we have been doing for more than a 100 years, and recognises that some of the best new writing now comes through non-traditional channels. The Bookseller’s job remains the same, however, to shout about these books and bring them to the attention of our audience.”

. . . .

“We also encourage self-published authors who are not yet on our platform to sign up today to be considered for this great opportunity and discover all of the great promotions available to Nook Press authors.”

Link to the rest at The Bookseller and thanks to Diana for the tip.

Barnes & Noble Treads Water

14 September 2014

From Publishers Weekly:

There was a mix of good news and bad news in Barnes & Noble’s first-quarter financials, which the company released last week for the period ended August 2. On the positive side, B&N cut its overall net loss to $28.4 million in the first quarter of fiscal 2015, down from $87 million in the same quarter last year, with $50 million in cuts coming from downsizing the company’s Nook segment, which had a negative EBITDA of $4.6 million in the quarter, operating at close to breakeven.

. . . .

On the negative side, while a decline in sales of Nook devices was expected, sales of digital content fell 24.2% and sales through also dipped in the quarter. Klipper said that the relaunch of the website, originally set for late summer, is taking longer than expected, and rather than releasing it during the holiday season, the new version of the site will not be introduced until 2015. Reversing the sales slide of digital content remains a top priority for B&N, Huseby said; to that end, the company is offering $200 in free content to consumers who activate new accounts when they buy the new Samsung Galaxy Tab 4 Nook tablet. B&N isn’t interested in just selling tablets, he emphasized, it needs to sell content as well.

Although Huseby didn’t offer details about the planned separation of Nook Media (comprising Nook and college bookstores), he implied that there is interest in Nook from outside companies. “What we are really finding out is that these third parties believe there is value in the Nook consumer assets and the catalogue, and our Nook Press, our publishing business, the people we have there, and our software—and that value probably exceeds our ability to realize it, based on our current capital structure,” Huseby said.

Link to the rest at Publishers Weekly

PG says when you’re firing people from the Nook division, you don’t get to keep the people you aren’t firing because everybody who is talented will go elsewhere. No wonder Nook can’t get its new website launched. All the good people are gone.

Charting Nook’s Decline

10 September 2014

From Digital Book World:

Barnes & Noble’s Nook division hasn’t fared well over the past four years. What was once thought to be the only credible challenger to Amazon’s dominance of the ebook business in the U.S. has fallen into a distant second or third position in the marketplace (Apple at this point may sell more ebooks than Barnes & Noble).

. . . .

“We’ve been rationalizing the business and trying to adjust the cost structure so it makes sense relative to the level of content revenues we’re generating,” said Huseby on an earnings call today, adding, “Obviously the Samsung partnership results in the need for fewer employees.”

The downside in all this, of course, is that Nook, once nearly a $1 billion business, is now a shadow of itself, something ebook publishers interested in a diverse retail marketplace should be wary of.

. . . .

Link to the rest at Digital Book World

Barnes & Noble’s Nook Business ‘Right-Sizes’ As Company Cuts Losses

10 September 2014

From Forbes blogs:

Good news today if you’re a Barnes & Noble investor: The company beat analyst expectations, shaving its first quarter losses to $0.56 a share, or just shy of $30 million on $1.2 billion in revenue.

Bad news, however, if you were among the dwindling few in the book publishing industry who still had hopes that Nook would remain a credible challenger to Amazon’s dominance of the U.S. ebook market: The Nook digital content and device segment saw its revenues decline 54.3% to $70 million versus the same quarter a year prior.

. . . .

If Barnes & Noble can turn Nook around and make it profitable and then sell it to a company — like Wal-Mart or Target, for instance — interested in competing with Amazon on new fronts and investing in the business, it could mean growth for what was once almost a billion dollar business.

Link to the rest at Forbes blogs

Barnes & Noble’s loss narrows, but sales fall

9 September 2014

From MarketWatch:

Barnes & Noble Inc. said its fiscal first-quarter loss narrowed as cost reductions outpaced sales declines as the bookseller gears up for its eventual split.

Barnes & Noble has struggled to adapt to shifting environments in book publishing and retail. Consumers are relying more on e-commerce outlets for book purchases, while e-books have cut into the market for physical books. The company’s retail segment posted a 5.3% decrease in revenue to $954.8 million during the most recent quarter.

The company sought to carve out its own niche in the tablet and e-reader space with its Nook device. However, the device failed to catch on as Inc. continued to exert its dominance in the digital-book market with its Kindle products, and the Nook business posted a series of losses. In the most recent period, the Nook segment’s revenue fell 54% to $70 million, while digital content sales declined 24% to $52 million.

. . . .

For the period ended Aug. 2, Barnes & Noble reported a loss of $28.4 million, or 56 cents a share, versus a loss of $87 million, or $1.56 a share, a year ago. Revenue fell 7% to $1.24 billion.

. . . .

The company attributed its retail sales decline to a 5.1% decrease in same-store sales, along with store closures and lower sales from its online operations.

Link to the rest at MarketWatch

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