The book retailer’s down 9.4% to $16.85 this morning after Chairman Leonard Riggio disclosed in an SEC filing that he unloaded 3.7M shares yesterday for an average of $17.30 apiece in a privately negotiated block trade. He says that he made the $64M deal “for long-term financial and estate planning purposes.” He still has 20.1% of the company’s stock, about 12.1M shares, making him “the Company’s largest shareholder, a position I feel very good about,” he said in a release. “I love this company and I believe in its future as I do in all of the wonderful people who work here.” It’s easy to understand why he’s so defensive: This is the second major stock sale by a Barnes & Noble insider this month: Earlier John Malone’s Liberty Media unloaded 90% of his stake. He picked up 17% of the company for $204M three years ago when he wanted to buy the retail chain. B&N’s stock price is down 24% over the last 30 days.
The stock is down about 12% in early trading after Barnes & Noble disclosed in an SEC filing that John Malone’s media company has agreements to sell 90% of its investment to “qualified institutional buyers.” Three years ago Malone offered about $1B to buy the book retailer. When talks stalled, he agreed to pay $200M for a 17% stake. With the sale, Liberty’s ownership in the company drops to about 2%. It also gives up its right to pick two members of the B&N board and to block asset sales. Liberty CEO Greg Maffei will leave when its stock sale closes on April 8. Another Liberty exec, Mark Carleton, was also going to leave but the book retailer’s directors re-elected him.
Liberty says that this isn’t a no-confidence vote: “By reducing our preferred position and eliminating some of our related rights, Barnes & Noble will gain greater flexibility to accomplish their strategic objectives,” Maffei says. B&N Chairman Leonard Riggio echoed that message and added “Liberty’s decision to retain a portion of its investment and have active involvement on our board underscores Liberty’s ongoing commitment to Barnes & Noble.”
The stock is up 7.5% to about $18 after G Asset Management disclosed that it has offered to pay $22 a share for 51% of the retail book chain — or $5 a share for 51% of the Nook tablet and e-reader business. The investment firm says that its offers are contingent on its ability to obtain financing, due diligence and — in the bid for the whole company – access to its credit facility and cash on the balance sheet. Barnes & Noble confirms that it has received the proposal, but declined to comment. G Asset Management says that in November it made an offer that valued B&N at $20 a share. “In that proposal, GAM suggested that the company should immediately separate the unprofitable Nook segment from the college and retail segment and recommended commencing a rights offering for the Nook segment to existing shareholders,” it says. The firm says it’s still “extremely confident that if the Nook segment is separated from the profitable retail and college business, substantial shareholder value would be created.” B&N is scheduled to talk with analysts on Wednesday about its financial performance at the end of 2013.
How badly do Barnes & Noble investors want the retailer to ditch its struggling Nook tablet and e-reader business? The company’s shares shot up 7.6% today, with heavy volume, after Business Insider reported that it laid off the unit’s hardware engineers. The company says that it didn’t fire the entire staff, but acknowledges that jobs have been eliminated across the organization. “We’re not going to comment specifically on those eliminations,” B&N says. “We believe we have a strong management team in place at Nook, having recruited significant new talent. The new Nook management team is focused on managing the business efficiently so that it becomes financially strong while at the same time aggressively moving to drive revenue growth.” Last month B&N reported that Nook revenues – which include digital content, devices and accessories — fell 60.5% to $125M in the nine-week holiday sales period that ended on December 28. Devices and accessories fell 66.7% to $88.7M which the company attributed to “lower unit selling volume and lower average selling prices.” Digital content fell 27.3% to $36.5M “due to lower device unit sales and lower average selling prices.” CEO Michael Huseby notes that B&N had no new tablets this holiday season, a tough comparison with 2012 when it had two.
The company’s position appears to be, it could have been worse. Barnes & Noble’s bookstores and online service generated revenues of $1.1B in the nine weeks ending December 28, it says today. That’s down 6.6% vs the period last year. But most of the decline is due to store closures. At stores open at least a year, revenues just fell 0.2% not including Nook tablets and e-readers. “We are pleased with our holiday sales results, especially our core comparable bookstore sales, which were essentially flat and an improvement as compared to the first half of the year,” newly named CEO Michael Huseby says. It’s harder to sugar-coat the story at Nook. Its revenues – which include digital content, devices and accessories — fell 60.5% to $125M. Devices and accessories fell 66.7% to $88.7M which the company attributes to “lower unit selling volume and lower average selling prices.” Digital content fell 27.3% to $36.5M “due to lower device unit sales and lower average selling prices.” Huseby notes that B&N had no new tablets this year, a tough comparison with last year when it had two. Without new products “we executed our plan to sell through our existing high-quality devices.” The company will have more to say on February 27 when it discloses its fiscal Q3 financials.
The retailer’s new chief is best known as a numbers guy and a dealmaker — especially in cable where he helped Cablevision spin off MSG and AMC Networks. He also was an exec at Charter Communications and AT&T Broadband, and spent 23 years at Arthur Anderson where he mostly advised cable companies. What’s he doing running the leading book retailer? Remember that John Malone’s Liberty Media owns about 17% of Barnes & Noble. And it’s concerned. Just yesterday Liberty CEO Greg Maffai told an investor conference that it’s a “challenging” time for the chain, noting that while the retail operation is “strong,” the Nook tablet and e-reader operation is “difficult” as it competes with Amazon, Apple, and Google. Shares are up 11.6% over the last 12 months — well below the benchmark Standard & Poor’s 500 which was +26.1%, and down more than 37% from the company’s 12-month high last May. Barnes & Noble has been without a CEO since July when William Lynch stepped down. Huseby was named CEO of Nook Media, and was promoted from CFO to president of Barnes & Noble. Shortly afterward company Chairman Leonard Riggio suspended an effort to take the retail operations private. “Although a relative newcomer to the retail book business, [Huseby] has quickly developed a comprehensive understanding of the unique opportunities and challenges the Company faces, and he has a …
Barnes & Noble was down in pre-market trading this morning as it reported fiscal 2014 Q1 earnings. The company posted a drop in revenues of 8.5% to $1.3B for the quarter ended July 27. It also reported a consolidated net loss of $87M, or $1.56 per share, compared to a loss of $39.8M, or $.76 per share, in the prior year. The wider loss was driven by a decline in EBITDA, as well as higher income tax expense, it said. Also, B&N said its chairman, Leonard Riggio, has suspended his efforts to make an offer for the company’s retail business. Riggio said, “While I reserve the right to pursue an offer in the future, I believe it is in the company’s best interests to focus on the business at hand. Right now our priority should be to serve the more than 10 million customers who own NOOK devices, to concentrate on building our retail business, and to accelerate the sale of NOOK products in our stores, and in the marketplace.” On the retail side, which includes stores and BN.com, the bookseller notched $1B in revenues for a 9.9% drop. The company attributed the decline to a comparable store sales decrease of 9.1% for the quarter, store closures and lower online sales, which it said were in line with expectations. In the same period last year, B&N had an especially strong lineup that included the The Hunger Games and Fifty Shades Of Grey trilogies.
The NOOK businesses reported revenues of $153M for the quarter, a decrease of 20.2%. Device and accessories sales were $84M, down 23.1%. Digital content sales hit $69M, shaving off 15.8% compared to a year ago.
Over the weekend, The Sunday Times revealed that Harry Potter creator J.K. Rowling was the true author of a well-received detective novel written under the pseudonym Robert Galbraith. The Cuckoo’s Calling had sold about 1,500 hardback copies since its April release, but when Rowling’s identity was revealed on Sunday, the book raced to the top of sales charts on Barnes & Noble and Amazon in both the U.S. and the UK. By Monday afternoon European time, the hardcover edition was listed as “temporarily out of stock” on both U.S. sites. The detective novel centers on war veteran Cormoran Strike who turns private investigator after losing a leg in Afghanistan. He’s barely scraping by when he’s asked to look into the death of a legendary supermodel. Rowling told The Times she’d hoped “to keep this secret a little longer because being Robert Galbraith has been such a liberating experience. It has been wonderful to publish without hype or expectation, and pure pleasure to get feedback under a different name.” The book was published in the UK by Little Brown’s Sphere, also the publisher of Rowling’s The Casual Vacancy which is being made into a BBC series. In the U.S., Little Brown imprint Mulholland says it will publish a second book in the series next summer and that The Cuckoo’s Calling is being reprinted, The Wall Street Journal reported.
The raft of executive changes at Barnes & Noble announced today include a new CEO for its NOOK e-reader division after company CEO William Lynch resigned — effective immediately. The board of directors tapped Michael Huseby as CEO of NOOK Media LLC and president of Barnes & Noble; Lynch’s title has not been filled, while the NOOK CEO post is newly created. Max Roberts, CEO of Barnes & Noble College, will continue to lead the digital education strategy and report to Huseby. Huseby and Mitchell Klipper, CEO of the Barnes & Noble Retail Group, will report to B&N executive chairman Leonard Riggio. The changes come after the retailer reported disappointing financials for the three months that ended in April, along with an $18.3M charge to account for weak sales of its NOOK tablets and e-readers. That unit lost $108M, or -34%, during the quarter. The company said during the earnings call that it will “significantly reduce losses” in the business by finding partners to help make its 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,” Lynch said at the time. Shares of Barnes & Noble finished Monday mostly flat at $17.66, then dropped 4.6% in after-hours trading.
The retailer’s stock price is down about 10% in pre-market trading after it released disappointing financials for the three months that ended in April, along with an $18.3M charge to account for weak sales of its NOOK tablets and e-readers. Barnes & Noble had a net loss of $118.6M in the quarter, vs a $56.9M loss in the period last year, on revenues of $1.28B, -7.4%. The top line was below analyst expectations for $1.33B. The net loss at $2.11 a share — including one-time expenses — contrasts with forecasts for a 99 cent loss. B&N says that it is evaluating some previous financial reports “which may result in a revision” although it doesn’t believe that the amounts will be material. The NOOK business was clearly a sore spot with revenues of $108M, -34%. The company says that it will “significantly reduce losses” in the business by finding partners to help make its color tablets. Revenues for retail book sales fell 10% to $948M due in part to store closures and a drop in online sales — and what it says were tough comparisons to last year which had strong sellers with The Hunger Games and Fifty Shades Of Grey.
The book retail chain’s shares are up 8.1% in mid-afternoon trading, making it one of the day’s biggest gainers in the media pack. Barron’s appears to be largely responsible for the move after it seized this weekend on reports that Microsoft might be willing to pay $1B for Barnes & Noble‘s NOOK tablet and e-reader platform. “It’s possible Microsoft may bid for Nook or the whole company, and there could also be interest from Liberty [Media]” which already owns 17% of Barnes & Noble, Barron’s says. Deals could send shares up as much as 50% the magazine estimates. The Microsoft rumor took off two weeks ago after Techcrunch cited “internal documents” that confirmed an offer. That sent shares to a 52-week high of $23.71. But enthusiasm fizzled last week when website Insider Monkey reported that a “highly placed source inside Microsoft” said an acquisition “is not happening in the foreseeable future.” That hasn’t put speculation about a big deal to rest. Founder Leonard Riggio has said that he might make an offer for the retail stores, although he hasn’t made it yet. Meanwhile Techcrunch yesterday cited “a source close to the matter” who says that Barnes & Noble is preparing to add a web browser, email, and apps to the Nook Simple Touch e-readers — potentially a big boost in functionality for a $79 device. The company recently …
The book retail chain has a bleak story for Wall Street this morning. It reported a net loss of $6.1M for the three months that ended in January, down from a $52M profit a year ago, on revenues of $2.2B, -8.8%. Revenues missed analyst expectations for $2.4B. And with a dividend on preferred shares thrown in, the company generated a net loss of 18 cents a share — a contrast to the 54 cent profit analysts anticipated. The NOOK results continued to disappoint. It generated $316M in sales in the quarter, down 25.9% from a year ago, with a cash flow (EBITDA) loss of $190.4M, worse than last year’s $82.8M loss. The results include $21M for returns, and $15M in promotional allowances. As a result, Barnes & Noble took a $59M writedown on its NOOK inventory. It says that it is “calibrating its business model and has implemented a cost reduction program that the company projects will significantly reduce NOOK’s expenses.” CEO William Lynch says that the company remains committed to the tablet and e-reader business. In the main retail bookstore business, sales decreased 10.3% to $1.5B although EBITDA increased 7.3% to $212M. Not including NOOK sales, revenues at stores open at least a year were down 2.2%. This week B&N founder Leonard Riggio said he may offer to buy the stores.
Liberty Media CEO Greg Maffei, whose company owns about 17% of Barnes & Noble, doesn’t seem impressed by this week’s disclosure by the book store chain’s founder Leonard Riggio that he may try to buy its retail operation. “It’s very preliminary,” Maffei told analysts today. “We’ll see where Len goes with it.” Maffei speculated that Riggio may have been legally bound by SEC rules to express an interest in buying just to keep the option open. “It was very logical that he would want to be interested,” Maffei says. He adds that he’ll “wait to see what happens” before saying whether Liberty might support or oppose a takeover. Riggio’s disclosure sure looked serious. He said on Monday that his purchase price “would be negotiated with the Board” and its advisers and “is currently contemplated” to include cash and assumption of debt. The company turned the negotiations over to a special board committee and hired outside financial and legal advisers. Maffei doesn’t sound like he wants to sell (which would also be a smart way to help negotiate up the price). Barnes & Noble’s bricks-and-mortar stores have “probably performed better than most outside observers would have thought, and better than we have thought” since 2011 when Liberty first invested. “We’re of the view that there will be retail bookstores around for a long time,” he says. “We really thought of ourselves …
Shares are up more than 15% in pre-market trading after Leonard Riggio disclosed in an SEC filing this morning that he plans to make an offer for the retailer’s main business. Barnes & Noble‘s founder, chairman and largest stockholder, with nearly 30% of the voting shares, says he’s interested in the stores and barnesandnoble.com, but not the NOOK Media operation where B&N owns about 78.2% of equity along with Microsoft which has 16.8% and Pearson with 5%. Riggio’s proposal would “facilitate the Company’s evaluation of its previously announced review of strategic options for the separation of its investment in NOOK Media,” he says. The purchase price “would be negotiated with the Board” and its advisers and “is currently contemplated” to include cash and assumption of debt. Riggio would include his equity and take on the debt needed to make the deal.
The stock is down 7.3% at midday following the book chain’s warning last night that there’s bad news ahead regarding its NOOK e-readers and tablets. It now forecasts that NOOK revenues for the fiscal year that ends in April will come in below $3B, with a cash-flow (EBITDA) loss that will be “greater than it was in fiscal 2012.” That contradicts Barnes & Noble‘s assurance last month that the NOOK unit would generate revenues of about $3B, with a cash flow loss “at a comparable level to fiscal year 2012.” And it makes 2013 the third straight year that Barnes & Noble will miss its guidance, Maxim Group analyst John Tinker notes. The NOOK business “is proving to be expensive — and with slowing revenues makes spinning it off to tech investors harder,” he says. “At some point the company has to quantify the amount it is prepared to lose.” The company says it will report earnings for the three months ending in January on February 28, later than it tentatively planned. B&N owns about 78.2% of the NOOK Media subsidiary, while Microsoft controls 16.8% and Pearson has 5%.
So much for the hope that price cuts and favorable reviews would enable Barnes & Noble‘s NOOK tablets and e-readers to keep up with comparable products from Apple, Amazon, and Google. The No. 1 book retail chain says that NOOKs underperformed over the nine-week holiday season while revenues at the overall retail business fell 10.9% to $1.2B. “NOOK device sales got off to a good start over the Black Friday period, but then fell short of expectations for the balance of holiday,” CEO William Lynch says. “We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward.” The one saving grace of the numbers is that investors expected them to be worse. B&N shares are up 1.9% in early trading Thursday, after falling 3.9% yesterday. The company says that core sales — not including NOOK products — fell 3.1% over the nine-week holiday period at stores open at least a year. That was better than B&N expected, and means the results for the basic business should be down by low- to mid-single digits for the fiscal year that ends in April. The holiday season decline rises to 8.2% when you factor in the fact that B&N has fewer stores, and had lower online sales.
The stock is down about 6.5% in early trading following the leading bookstore chain’s earnings report that left open questions about whether it can keep up with online rivals led by Amazon that continue to take market share. Helped by $2.8M in dividends received from preferred shares, Barnes & Noble reported net income of $2.2M for the quarter ending in October — up from a $6.6M loss a year ago — on revenues of $1.88B, -0.4%. The revenue figure is slightly lower than the $1.91B that analysts expected. But excluding the dividend, the net loss attributable to B&N of 4 cents a share beat the Street’s forecast of a 6 cent loss. At the retail unit, which includes the bookstores and book sales at BN.com, revenues fell 2.9% to $996M. The company says that last year’s numbers were helped after Borders liquidated. But in stores open at least a year, sales (not including its NOOK eReaders and tablets) were up 1.8%. In college textbooks B&N revenues were up 0.4% to $773M. Meanwhile the NOOK operation — which includes the hardware as well as digital content — remains a mixed story: Revenues were up 5.6% to $160.3M but it still generates a cash flow loss as B&N invests in new products and overseas expansion. The company says that NOOK unit sales doubled in last week’s four day Black Friday period vs last year — which matches Amazon’s experience with its Kindles.
The “sophisticated criminal effort” captured consumers’ credit and debit card numbers after conspirators planted bugs in PIN pads at 63 Barnes & Noble stores, the company says this morning. The scheme didn’t affect Barnes & Noble’s Nook tablets or mobile apps, the chain’s member database, or any Barnes & Noble College Bookstores. B&N says it caught the problem in mid-September, and that it’s safe now to use credit and debit cards at its stores. It pulled all of the PIN pads in nearly 700 outlets. Still, the company urges consumers at the stores that were hit — listed in the press release below — to change their PIN numbers and check their accounts to be sure that they don’ t include phony transactions.
Here’s the release:
Shares rose 8.3% to $14.96 this afternoon after CEO William Lynch vigorously argued at a Liberty Media investors’ meeting that stock buyers aren’t giving the book retail chain its due. With a market price of about $884M, the company that generated $7.2B in revenues last year “is undervalued,” he says. There’s a “strong, profitable and vibrant business” in its traditional bookstores, especially as rivals including Borders have closed. Lynch also urged investors to take a closer look at its new Nookmedia LLC partnership with Microsoft. The operation was valued at $1.7B this year when the computer giant invested $300M for a 17.6% stake in an operation that includes B&N’s Nook e-readers and tablets, e-Books, and college-targeted software. B&N’s stock price suggests that “investors are getting Nookmedia for free,” Lynch says. That overlooks the opportunities for the company as it builds its eBook sales, digital subscriptions, and eLearning — which he says has “big plans and announcements coming.” Lynch also talked up the new Nook HD and Nook HD+ tablets, which have won encouraging reviews ahead of the October 25 ship date. Nookmedia is “a big and growing company in an exploding space,” Lynch says. Liberty owns 17% of B&N.