The nation's largest in-store bookseller saw its shares open Thursday trading below $10 a share and within reach of all-time lows after the Nook announcement and a cut to its sales and earnings outlook. The share drop put into question the wisdom of the Nook digital books spin. The unit saw sales jump over 40% in this year's nine week holiday season, compared with 2010.
Nook tablets and digital content have been one of the only bright spots for Barnes & Noble, which has been hurt by declining sales of physical books for several years. In its business selling digital content and mobile e-reading devices, Nook's sales rose 43% from 2010, while Barnes & Noble brick-and-mortar rose just 2.5%.
On a dimming sales outlook and uncertain spin plans, Barnes & Noble's share plunge hit to two of its biggest shareholders, chairman Leonard Riggio and activist investor Ron Burkle and his Yucaipa Companies funds. Riggio, who bought Barnes & Noble in 1970, owns nearly 30% of the company's shares, while Yucaipa has a near 20% Barnes & Noble stake.
Barnes & Noble cut its overall 2012 outlook for sales and earnings - leading to an earnings per share loss expectation as high as $1.40. Meanwhile, the company ascribed a glowing outlook to its Nook-fueled BN.com business, which it expects to grow as much as 50% in 2012, while its brick and mortar and Barnes & Noble College businesses achieve flat sales. For more on Barnes & Noble here's a look at black-friday-2011-stock-short-squeezes and the reasons why Barnes & Noble can't act like Amazon. With investors questioning the logic of Barnes & Noble's latest spin attempt, here's a look at the other deals that transformed the bookseller with a 100-year plus legacy, which did not always benefit shareholders.