B&N Reports Revenues Down, Announces Plans to Shuffle the Deck Chairs And Sing "Nearer My God to Thee"
The tl;dr version of today’s news is that B&N lost money and market share this past year, and in response they decided to make a minor change to their current operations in the hopes that it will fix everything.
Here’s the bad news:
Fourth quarter consolidated revenues decreased 7.4% to $1.3 billion as compared to the prior year. The consolidated fourth quarter earnings before interest, taxes, depreciation and amortization (EBITDA) loss was $122.0 million, as compared to a loss of $9.7 million in the prior year. The consolidated fourth quarter net loss was $118.6 million, as compared to the prior year net loss of $56.9 million. Fourth quarter net losses were $2.11 per share as compared to a net loss of $1.06 per share a year ago.
For fiscal 2013, consolidated revenues decreased 4.1% to $6.8 billion as compared to the prior year. Fiscal 2013 consolidated EBITDA was $10.3 million, as compared to $176.7 million a year ago. Fiscal 2013 consolidated net losses were $154.8 million, or $2.97 per share, as compared to $65.6 million, or $1.35 per share in the prior year.
Here’s more bad news:
The NOOK segment, which consists of the company’s digital business (including devices, digital content and accessories), had revenues of $108 million for the quarter and $776 million for the full year, decreasing 34.0% for the quarter and 16.8% for the year, as compared to the year ago periods. Device sales declined during the fourth quarter due to lower selling volume. Digital content sales increased 16.2% for the full year, however, they decreased 8.9% for the fourth quarter due in part to the device sales shortfall as well as the comparison to the The Hunger Games and Fifty Shades of Grey trilogies a year ago.
I wouldn’t get to excited about the fact that digital content sales increased by 16%. That is a far smaller growth than reported by Amazon, and that 16% is even smaller than the AAP’s estimation for the increase in the US ebook market (44%). Also, a good chunk of that increase probably came from video sales.
In other words Nook’s share of the ebook market shrank in 2012.
And here’s the worse news. Barnes & Noble didn’t announce any radical plans today.
They haven’t sold off Nook Media yet, nor are they getting out of the hardware business – not completely. They’re going to continue to design their own ereaders, but they are no longer going to make tablets:
Thus, the widely popular lines of Simple Touch™ and Glowlight™ products will continue to be developed in house, and the company’s tablet line will be co-branded with yet to be announced third party manufacturers of consumer electronics products.
Funny thing is, June has come and almost gone and there is no new Nook. I think that mention of the Nook Touch might be a red herring; at the very least there won’t be a new one this Summer (Fall, maybe).
B&N’s other future plans include releasing new Nook Apps, but as you might recall from yesterday many current apps appear to have been abandoned. With that in mind I do have to wonder what Bill Lynch was smoking when he made this quote:
“We plan to continue to innovate in the single purpose black-and-white eReader category, and the underpinning of our strategy remains the same today as it has since we first entered the digital market, which is to offer customers any digital book, magazine or newspaper, on any device.”
Oh, really? Then when will I be able to read the graphic novel I bought from B&N on my PC? What about the magazines?
Folks, the only change that B&N announced today was that they were no longer going to make tablets and instead were planning to put their brand on tablets made by a 3rd party (Sony, Samsung, Asus, Acer, Gajah, the list is endless).
That is a relatively minor change in their business model, and I am not convinced that it is enough to rescue the company. And that goes double when you consider that the same fools who ran the ship into the iceberg are still in charge.
P.S. Last week I made a wild prediction that B&N would either sell off or shut down the Nook platform. Neither prediction came true, but only because B&N failed to make a radical move to save themselves.