And just when we thought Barnes & Noble was safely on its way to the grave.
According to the press release:
Third quarter consolidated revenues decreased 10.3%, to $2.0 billion, as compared to the prior year. Third quarter consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) increased from $59 million a year ago to $173 million. Prior year results were adversely impacted by $74 million of NOOK inventory-related charges. The remaining year-over-year EBITDA increase was primarily attributable to lower NOOK expenses.
Revenues were down but profit was up slightly, due to lower NOOK expenses. Some jobs have already been eliminated in the NOOK segment, and more are on the way. This shouldn’t come as a surprise to anyone. But here’s the kicker:
The NOOK segment (including digital content, devices and accessories) had revenues of $157 million for the quarter, decreasing 50.4% from a year ago. Device and accessories sales were $100 million for the quarter, a decrease of 58.2% from a year ago, due to lower unit selling volume and lower average selling prices. Digital content sales were $57 million for the quarter, a decline of 26.5% compared to a year ago, due primarily to lower device unit sales.
That’s a big drop in revenue. Not that it’s a surprise to anyone, but still. Wow. Huge decrease in just a year. Even content sales were down. They attribute that to lower device unit sales, but I’m not convinced. People bought Nooks and Nook media a year ago, right? You’d think they are still buying content to fill their Nooks, right? Assuming they are buying from B&N, I wouldn’t have thought content sales would drop that much. I conclude that the problem is deeper than content sales. B&N opened up the Nook tablets to Google Play about a year ago now, and I’m guessing tablet owners are doing what I’m doing. Reading content on our tablets from sources other than Barnes & Noble.
So what does B&N plan to do? ” We plan to launch a new NOOK color device in early fiscal 2015.” Well, this should be interesting. If it’s a good device, it might sell. However, if they lock it down too much, it won’t sell well. And if they don’t lock it down, users are likely to do what I do. Use the device, but buy elsewhere.
Really, I don’t see a good path here for Nook. Is anyone seeing something I’m missing?