Barnes & Noble reported record Nook sales today with unit sales up 70 percent over the same period last year. Digital content sales which the company defines as ebooks, digital newsstand, and apps were also up 113 percent compared to the previous year. Same store physical sales were also up 2.5 percent.
With the increase in Nook unit sales and digital content sales you would think the company is doing great. Unfortunately, the release also contained downward revisions in the company’s financial estimates. They expect to lose two to three times more money in 2012 than they thought they would just a month ago.
In other words, the Nook is selling well but it is costing the company massive dollars to make those sales happen. So their solution is to try and find someone with lots of money to continue to grow the Nook business line. That’s right. They are exploring a separation of the Nook business. They are considering everything from tracking the Nook financials separately to a possible spinoff or sale of the Nook business.
Of course, this all makes little sense since one of the main reasons that the Nook is doing so well is because they are pushing it at all the B&N stores and because it has all the branding and backing of the only remaining national book retailer. Hardly anyone even knows about all the other ereaders out there besides the Kindle, Nook, and iPad/iPhone/iPod. If B&N sold off the Nook to some other company it would probably dissappear quickly.
Though if they don’t sell it off it might dissappear slowly. The info not stated in the release is that Amazon’s Kindle and Kindle Fire and Apple’s iPad are brutal to compete with. Amazon is willing to lose money or breakeven to grow their business and Apple created the tablet market. B&N can’t afford to operate with a loss for very long or they will end up following the path of Borders into bankruptcy.
So Barnes & Noble is selling a lot more Nooks and if they’re not careful it just might kill the company. Such is life when you’re up against Apple and Amazon.