After sourcing outside entities to make their hardware, Barnes & Noble is now spinning of the Nook division from the company proper. They’re going to pursue having the Nook division spinoff into a standalone entity, effectively creating two companies. One has the potential to sustain the troubled waters ahead, while the other may not.
Barnes & Noble has seen its share of issues the past few years, all of which threaten to sink the retailer. Between the rise of Amazon and overall eBook craze, B&N has found sustaining a massive retail presence tough. Spinning Nook off into its own business is likely meant to stave the bleeding.
the Nook division within Barnes & Noble is in serious decline. Last quarter, Nook dropped 22% in revenue, while the retail segment was up almost 1.0%. B&N Chief Executive Michael P. Huseby said “We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of NOOK Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately.”
Shares are up roughly 7% on the news, too. Though Barnes & Noble was one of the first out of the gate with their original Nook, the onslaught of eBook portals is proving tough. Amazon, the App Store, Google Play — all have books and magazines. Barnes & Noble may also look to sell off the Nook division; something they’ve looked into previously.
Source: The Wall Street Journal