A few months ago, Barnes and Noble shocked the digital world when they said they were getting out of the device manufacturing business and splitting the company into two different segments. Today, the company totally reversed themselves, saying “If we want to be in the content business, we need to be in the device business.”
Barnes and Noble organized an investors call today, the first one under Nook Media CEO Michael Huseby. They stated that the Nook e-reader business, which includes hardware and digital content, logged revenues of just $153 million, down more than 20% from the same period a year ago. Hardware sales were down 23% and content sales were down almost 16%.
Michael Huseby mentioned, “We have sold approximately 10,000,000 Nooks and our content activation levels need to better leverage that accomplishment. Therefore, we are implementing programs to better serve our existing customer base and also aggressively exploring other target consumer markets with the potential to generate new revenue.”
One of the reasons Barnes and Noble is losing money on the Nook business is due to the sheer amount of inventory they have. “We overestimated demand for the products that we put out. As a result of that, we had to discount those products and we’re selling them now. We don’t want to be in that position again…eventually we’ll move to a business of lower priced at higher volume.”
He went on to say, “Our top priority in our operating strategy is to increase all categories of our content revenue. We are working on innovative ways to sell content to our existing customers and are exploring new markets we can serve successfully. The company intends to continue to design and develop cutting-edge NOOK black and white and color devices. We will continue to offer our award-winning line of Nook products including Nook Simple Touch, Nook Simple Touch with Glow Light, Nook HD and Nook HD+ at the best values in the marketplace. At least one new NOOK device will be released for the coming holiday season and further products are in development. All Nook devices will continue to be backed by world-class pre- and post-sales support in Barnes & Noble stores, as well as ongoing software upgrades and improvements to the digital bookstore service.”
Investors in the company were shocked by the revelations made today and have little faith in a company bleeding money. People may be concerned that B&N is lacking a complete vision in Nook Media, and are taking today’s announcements with a revamped website and new products with a grain of salt.