Shift To E-books To Hurt Bookstores, Analysts Say

NEW YORK (AP) — The shift from digital to physical books will ultimately hurt traditional bricks-and-mortar book sellers, analysts said Friday on the heels of Barnes & Noble Inc., the largest U.S. bookstore chain, launching its new e-reader.

Barnes & Noble introduced the Nook Tuesday as a competitor to online retailer Amazon.com's Kindle, which has dominated the e-reader market.

Barnes & Noble, which operates 774 brick-and-mortar stores, also has an e-bookstore that offers more than 1 million titles and an e-reader application that can be used on mobile devices and personal computers, as well as the Nook. The company could become a major player in the digital book business, but that actually may speed the downward trend in its revenue and profit, said Credit Suisse analyst Gary Balter, who rates the company "Underperform."

"As the math currently works, each sale through a Nook is not just unprofitable but potentially replaces a higher-margin sale at stores," Balter wrote in a client note Friday. He lowered his price target to $16 from

One obvious risk is that downloading books reduces the need to go into stores, Balter said.