Nook Tablets Separates from Barnes & Noble (NYSE: BKS) To form its Own Publicly Traded Company

Nook, Barnes  & Nobles, Apple,  AmazonBarnes & Noble Inc (NYSE: BKS) has agreed to spin-off its Nook electronic reader business into a separately traded company. The new business plan is a new measure to improve performance as the retailer is facing declining sales at both its bookstore chain and the Nook electronic reader.

The announcement came Wednesday morning as its board of directors gave the approval to separate Barnes & Noble retail and the Nook business into separate publicly traded companies. The tablet has not appeared to be the e-reader favorite in the tough competitive tablet market that is dominated by Apple Inc’s (NASDAQ: AAPL) iPad, Amazon.com’s (NASDAQ: AMZN) Kindle, and Samsung’s Galaxy Tablet. The spinoff is expected to be completed by the first quarter of 2015.

“We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of NOOK Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. We fully expect that our retail and Nook Media businesses will continue to have long term, successful business relationships with each other after separation.” Michael Huseby, Barnes & Noble CEO, said in a statement Wednesday morning.

The company also reported fourth quarter results which showed a drop in the bookstore’s sales as well as ongoing losses of its Nook unit. Barnes & Noble predict sales would decline in the single digits this fiscal year.

Barnes & Noble showed a fourth quarter loss of $36 million, or 72 cents a share, compared with a $114 million, or $2.04 a share the prior year. The retail store generated $53 million in earnings last quarter. The total revenue increased 3.5 percent to $1.32 billion, boosted by its college business which includes textbook sales and rentals. Nook sales accounted less than 10 percent of the total.

The Nook e-reader lost $56 million in the fourth quarter, an improvement of the $181 million loss during the same quarter a year ago. In a full year basis, Nook saw $505 million in revenue, a major drop compared to its 2013 sales of $780.4 million.

As of 12PM, shares of Barnes & Noble are up 5.69% at $21.72

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