Yesterday, The Wall Street Journal reported that Barnes & Noble was looking to sell its book publishing arm. Today, the company announced that it was exploring the possible spin off of its popular Nook electronic reader business.

“In order to capitalize on the rapid growth of the Nook digital business, and its favorable leadership position in the expanding market for digital content, the company has decided to pursue strategic exploratory work to separate the Nook business,” the company wrote in a press release today.

Added Barnes & Noble CEO William Lynch:

“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. In Nook, we’ve established one of the world’s best retail platforms for the sale of digital copyright content. We have a large and growing installed base of millions of satisfied customers buying digital content from us, and we have a Nook business that’s growing rapidly year-over-year and should be approximately $1.5 billion in comparable sales this fiscal year. Between continued projected growth in the U.S., and the opportunity for Nook internationally in the next 12 months, we expect the business to continue to scale rapidly for the foreseeable future.”

A separate Nook business unit could pose more of a challenge to Amazon.com, creating a more nimble competitor. Kindle is still the leader in the electronic reader category, with Amazon saying that it sold some four million Kindle devices during the month of December.

In today’s release, Barnes & Noble touted the Nook’s growth as well, but did not provide specific numbers. The company did, however, say that Nook unit sales increased 70 percent during the nine-week holiday period when compared to the same period last year. Digital content sales for fiscal year 2012 are expected to be $450 million, growing to a run rate of $700 million to $750 million by the end of the year.

Comments

  • http://www.intrinsicstrategy.com FrankCatalano

    And this would leave Barnes & Noble with exactly what else that’s forward-looking and rapidly growing in its market? Or, put another way: Is this “unlocking” value, or simply letting it go? 

    Amazon still sells physical books, giving customers a choice of formats: paper or digital. This seems shareholder- and not market- or customer-focused, on the surface. I sniff a potential new Qwikster: the remaining (or is that the remains of?) B&N.

  • Observer (and Kindle owner)

    A separate Nook business would be able to work with independent bookstores in addition to B&N. Right now, neither side wants that to happen. If Nooks were available in every physical bookstore and the bookstores could make money selling ebooks for Nook (and not in the clunky way they do now), Nook could become a serious challenger to Amazon.

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