The Future of the Ebook

Barnes and Noble’s Nook Sales Suggest Microsoft Has Bet on the Wrong Horse Once Again

It's going to take more than sex to save this company.
 Barnes and Nobles Nook Sales Suggest Microsoft Has Bet on the Wrong Horse Once Again

Look upon my works ye mighty and despair. (Photo: flickr.com/acrider

The numbers are in for Barnes and Noble’s most recent quarter, and matters could definitely be better. Let’s put it this way: When a company’s bottom line is bouyed by the runaway popularity of a raunchy romance–rather than by sales of the devices to which it’s devoted a ludicrous amount of in-store floor space–it’s probably not a particularly encouraging sign.

It’s got to be especially discouraging, however, for Microsoft. Back in April, the company agreed to invest $300 million in “NEWCO,” the subsidiary Barnes and Noble is creating from its Nook and college businesses. We can’t imagine the staid software company entered into the agreement in hopes of receiving a BDSM boost to its bottom line.

Here’s the spin that Barnes and Noble CEO William Lynch put on the company’s earnings, chirping away about the 50 Shades frenzy:

“During the first quarter, we continued to see improvement in both our rapidly growing NOOK business, which saw digital content sales increase 46% during the quarter, and at our bookstores, which continue to benefit from market consolidation and strong sales of the Fifty Shades series.”

Note that he cites digital content sales. The sales of the Nook device itself? Not so great. The earnings report says:

Device sales declined for the quarter due to lower average selling prices and production scaling issues surrounding the popular newly launched GlowLight product resulting in unmet demand.

Did we just hear a bear-like bellow of fury from the general direction of Redmond?

Paid Content has crunched the numbers in excruciating detail, and their prognosis is downright grim:

A holiday sales spike following the launch of the Nook Tablet in November 2011 hasn’t been enough to sustain the Nook business. And despite the launch of the front-lit Nook e-reader in April 2012, Nook business revenues are flat compared to this time last year. (Or they’re down: The Digital Reader points out that Barnes & Noble previously reported Nook sales of $277 million for the period ending July 30, 2011, but now says they were $191.4 million. I’ve asked B&N to explain the discrepancy.)

Microsoft is investing $300 million to spin off Barnes & Noble’s Nook and college businesses into a new company. But these revenue figures suggest that’s a bad bet.

The earnings statement says the deal with Microsoft is expected to close in this fall.

Frankly, we’re starting to wonder if there’s an element of masochism at work.

Follow Kelly Faircloth on Twitter or via RSS. kfaircloth@observer.com

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