Barnes & Noble Considering Spinning Off Nook Business

[Techtaffy News]

Barnes & Noble says the company is considering separating the Nook business. “We see substantial value in what we’ve built with our Nook business in only two years, and we believe it’s the right time to investigate our options to unlock that value,” said William Lynch, Chief Executive Officer of Barnes & Noble.

Barnes & Noble is in discussions with strategic partners including publishers, retailers, and technology companies in international markets that may lead to expansion of the Nook business abroad.

Barnes & Noble has invested heavily in developing its new platform, including recruiting talent and increasing its advertising and marketing spend, and says its customer Life-Time-Value (LTV) models indicate that these up-front investments will create significant value.

During the nine-week holiday period ending December 31, 2011, Nook unit sales (including Nook Simple Touch, Nook Color and the new Nook Tablet) increased 70 per cent over the same period last year.  Sales of Nook Tablet exceeded expectations, while sales of Nook Simple Touch lagged expectations, indicating a stronger customer preference for color devices, says Barnes & Noble. Digital content sales also grew briskly during the same nine-week period, increasing 113 per cent on a comparable basis.

Barnes & Noble expects fiscal 2012 digital content sales to be approximately $450 million. By year-end, based upon forecasted device sales, Barnes & Noble expects annualized U.S. digital content sales will achieve a run-rate of approximately $700-$750 million.

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