Earnings Preview: Barnes & Noble 4Q

Analysts hope for Nook update, expect smaller loss in Barnes & Noble's 4th quarter

Associated Press

NEW YORK (AP) -- Barnes & Noble Inc. may shed light on the future of its Nook e-book and e-reader business when it reports fourth-quarter results before the market opens on Tuesday. Analysts expect a smaller net loss on lower revenue than a year ago.

WHAT TO WATCH FOR: Barnes & Noble has invested heavily in its Nook unit to offset rising competition for physical books from online stores and discounters, as well as consumers' reading tastes shifting to electronic formats.

But there are signs it may be rethinking that strategy. There has been speculation that Barnes & Noble is seeking to exit the hardware business to develop software and content for other companies' tablets and smartphones. Barnes & Noble has not commented on those rumors. However, this month Barnes & Noble knocked the price of its 7-inch Nook HD down to $129 from $199, and its 9-inch Nook HD+ to $149 from $269. The sale was supposed to be a Father's Day deal but it has been extended for an undisclosed "limited time." That might indicate that Barnes & Noble is looking to clear out its stock of tablets.

Other speculation on the Nook is that Microsoft, which has a 6.8 percent stake in the Nook unit, could offer to buy the unit outright. Barnes & Noble and Microsoft have said they don't comment on rumors. Analysts will be interested in any hints Barnes & Noble gives about the Nook's future.

As far as the other parts of B&N's business, analysts will also be looking for an update about Leonard Riggio, Barnes & Noble's founder, who has offered to buy the physical bookstores and website of Barnes & Noble, but not the Nook unit.

WHY IT MATTERS: New York-based Barnes & Noble's sales of books and e-books can give insight into how well the publishing industry is doing and how it is evolving.

WHAT'S EXPECTED: Analysts expect a net loss of 96 cents per share on revenue of $1.33 billion in the February to April quarter.

LAST YEAR'S QUARTER: In the prior year quarter, net loss totaled $1.08 per share on revenue of $1.38 billion.

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