Barnes and Noble Considering Nook Business Spin-Off

Barnes & Noble could spin off its Nook e-reader business, according to the company. Amazon's Kindle Fire and the Nook Tablet are currently battling for customers.

Is Barnes & Noble's Nook losing the e-reader wars to Amazon's Kindle franchise?

In a holiday sales statement issued Jan. 5, the bookseller suggested it would absorb deeper-than-expected losses over the course of its fiscal year. "The change in guidance is due primarily to a shortfall in the expected sales of Nook Simple Touch, as well as additional investments in growing the Nook business," it read, "such as advertising to support new products and international expansion in the back half of the year."

Overall, Nook unit sales increased 70 percent year-over-year, with sales of the full-color Nook Tablet apparently exceeding expectations.

Moreover, Barnes & Noble is considering a spin-off of that Nook business, although it cautioned in the statement that "there is no timetable for the review, and the Company does not intend to comment further regarding the review." Discussions about expanding the Nook's presence into international markets are apparently under way with unnamed publishers, retailers and technology companies.

Contrast that with a December statement from Amazon, in which the online retailer claimed sales of its Kindle devices had topped 1 million per week. "We've already sold millions of units, and we're building millions more to meet the high demand," Dave Limp, vice president of Amazon Kindle, wrote in a Dec. 15 statement. "Kindle Fire sales increased week-over-week for each of the past three weeks."

If sales of Amazon's gray-scale Kindle e-reader have softened in recent months, the company has so far declined to reveal that in any sort of public statement. Over the holidays, Amazon claimed, the Kindle Fire became the top-selling and most-gifted product in its store, while sales of Kindle books between Black Friday and Christmas Day rose 175 percent year-over-year.

Whether the Kindle Fire or the Nook Tablet, it seems that customers are interested in cheaper, full-color Android tablets designed primarily for e-reading and other media content. Based on its public statements, though, it seems that Barnes & Noble is wrestling with the costs and effort necessary to present a viable alternative to Amazon in the space. Does that mean the Nook franchise is doomed? Not necessarily. But the battle with Amazon-which, thanks to its broader array of businesses and large market capitalization, can indulge even in those projects that burn enormous sums of money for many years-could soon force the bookseller to make some fairly radical moves.

If Barnes & Noble decides to split off its Nook business, who would buy it? Is Google in the mood to further challenge Amazon and Apple for e-reader supremacy?

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