Barnes & Noble is taking steps to reduce risks around its struggling Nook tablet business, announcing today that it will form partnerships with undisclosed third-party manufacturers to build its line of color tablets.
“We are taking big steps to reduce the losses in the NOOK segment, as we move to a partner-centric model in tablets and reduce overhead costs,” noted Barnes & Noble CEO William Lynch. “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.”
Barnes & Noble also announced financial results for its fiscal fourth quarter and full year, showing disappointing sales in the Nook business unit in particular. Revenues fell 34 percent during the most recent quarter and were down 16.8 percent on the year.
The plan to outsource manufacturing on the color Nooks comes amid speculation that Microsoft, which invested $300 million in the tablet business last year for a 17 percent stake, could consider an outright purchase of the business. As GeekWire’s Todd Bishop recently wrote, the jury is still out on Microsoft’s Nook deal, which he noted was an odd coupling from the start, since Microsoft and Barnes & Noble had previously been tied up in a patent fight.
Whatever happens, Barnes & Noble is in trouble as it deals with increasing pressures from Amazon.com. Sales at the entire company dropped 7.4 percent during the fourth quarter to $1.3 billion, and its net loss on the full year came in at $154 million. The stock is getting smashed today, down more than 15 percent as The Wall Street Journal notes that Barnes & Noble is throwing in the towel on its tablet business. This chart, released today as part of the company’s financial report,shows the shrinking business in great detail: