Barnes & Noble reported its fiscal fourth quarter earnings this morning, and the financials make it clear that the company is still struggling to figure out how it fits into the larger digital reading ecosystem. All told, BN reported a quarterly net loss of $118.6 million (compared to $56.9 million from the year ago quarter) which works out to a loss of $2.11 per share on $1.3 billion in revenue.
Analysts weren’t expecting much going into this quarter (and BN’s own anemic guidance from Q3 didn’t inspire much confidence): the consensus according to Bloomberg was for the company to report a loss of $0.96 per share on $1.3 billion in revenue. They also predicted a 4% drop in annual revenue for the company, which was just about right on the money — the company reported $6.8 billion in revenue for fiscal 2013, as well as a corresponding loss of $154.8 million.
Ouch.
BN’s retail business didn’t look too hot this time around, as quarterly revenue was down 10% year-over-year to $948 million (though the company cites the strength of series like Hunger Games and Fifty Shades of Grey as inflating last year’s numbers). That may not be BN’s problem for too much longer though, as company founder Leonaro Riggio started openly opining on the notion of buying back the company’s 689 brick-and-mortar stores (not to mention bn.com) back in February. Should the transaction eventually come to pass — which is by no means a given — Barnes & Noble will effectively be left with its Nook Media business.
Meanwhile, Nook Media (which BN owns 78% of after you factor in Microsoft and Pearson’s stakes) continues to look like a real stinker this quarter. It reported a relatively scant $108 million in quarterly revenue, which represents a staggering 34% drop from the year-ago quarter.
The intensity of that dip is surprising, but not to some — some analysts have pegged the sales slump on the fact that Nook tablets lacked the productivity acumen and app access to compete with other low-cost devices. Barnes & Noble finally managed to fix that this past May by striking a deal with Google to fold Google Play Store access and a few stock Android applications like Gmail and Chrome into Nook tablets, while simultaneously trying to jump-start Nook sales by announcing slashed nook prices put in place for Fathers’ Day will stay in effect for the foreseeable future.
What is new is that Barnes and Noble is looking to open up the Nook brand to other OEMs itching to make their own tablets. The company will continue to offer its own first-party e-readers like the Simple Touch series as time goes on, but in a bid to minimize the risk inherent to churning out tablets in a crowded market, BN is leaving that work to third-party manufacturers. There’s no word yet on exactly when the company will officially kick off its so-called partnership program (though I suspect they’re already in talks with some OEMs), but it seems likely that the existing Nook HD and HD+ will be the last to bear BN’s fingerprints. Don’t expect them to disappear completely just yet though — they’ll be around at least through the holidays.
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