The retailer’s stock closed -12% today after it disclosed in an SEC filing that the agency is investigating two matters involving the company’s recent financial reports. On October 16 the SEC’s New York regional office told Barnes and Noble that it’s looking at a company earnings restatement in July. In addition, the SEC is curious about a charge by a “former non-executive employee” that some Information Technology expenses had been ”improperly allocated” between the Nook and Retail segments. “The Company is cooperating with the SEC, including responding to requests for documents,” Barnes and Noble says in the filing. Did the chain lose $117M of its market value today just because of an investigation? Probably not. Many investors have also become pessimistic about the number of Nook tablets and e-readers that Barnes and Noble will sell this holiday season — especially after Amazon CEO Jeff Bezos attracted so much attention on 60 Minutes last week when he disclosed his experiments with delivery drones. “If you’re looking for an excuse” to sell B&N shares, then the SEC investigation “is the perfect one,” says Maxim Group analyst John Tinker.
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.
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.
It’s natural to wonder whether Liberty Media Chairman John Malone’s new acquisition of 27.3% of Charter Communications is merely Step One in a plan to make him a U.S. cable titan — the role he played until 1999 when he sold Tele-Communications Inc to AT&T. And while Liberty CEO Greg Maffei doesn’t predict that, he also didn’t rule it out today in a quarterly earnings call with analysts. He says that cable “could be in for a round of consolidation” at a time when it’s so inexpensive to borrow money and large companies covet opportunities to cut costs — for example by negotiating lower prices from programmers. He cryptically adds that even though Charter can do just fine as a stand-alone entity, “we’ll see” whether it ends up being “a consolidator or condolidatee.” Liberty’s stock purchase agreement gives it the right over time to raise its stake to 40%. Will it do so? “We’ll see what time holds,” Maffei says.
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 …
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 …
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.
NBC Universal and 20th Century Fox Home Entertainment will supply standard definition and HD movies and TV shows to the NOOK Video download and rental service — just as Barnes & Noble prepares this week to ship its NOOK HD and NOOK HD+ tablets and offer them in its stores. The bookstore retailer’s release skimps on details about the agreements, including how much content the studios will provide, how much titles might cost, and what other devices might be able to handle Nook Video streams and downloads. But it says that titles include Snow White And The Huntsman, Battleship, Dr. Seuss’ The Lorax, Ice Age: Continental Drift, and Diary Of A Wimpy Kid: Dog Days. Along with its previous deals with HBO, Sony Pictures Home Entertainment, STARZ, Viacom, Warner Bros, and Disney, Barnes & Noble says it will offer “thousands of movies and TV shows for all ages and interests.” The new agreements, and tablets, also are designed to make it easy for NOOK owners to stream videos from their UltraViolet accounts.
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:
That’s hard to say: Even Barnes & Noble can’t articulate why consumers might favor its planned digital video purchase and rental service over its more established rivals. There’s no word on how much movies and TV shows will cost. It’ll be “incredibly competitive,” says B&N General Manager of Emerging Digital Content Jonathan Shar. We don’t know how many movies and TV shows B&N will offer, or how recent most titles will be. We don’t even know whether it will work with all flavors of Apple and Android powered devices. “As one of the world’s largest retailers of physical video discs and digital copyrighted content, our new NOOK Video service will give our customers another way to be entertained with a vast and growing digital video collection, as part of our expansive NOOK Store,” CEO William Lynch says.
Shares in Barnes & Noble were trading up ahead of the opening bell today as the company reported fiscal 2013 Q1 results. The bookseller’s consolidated Q1 net loss narrowed 28% to $41M as compared to a …