Barnes & Noble Drops on Earnings, Surface

Retailer's Q4 numbers fall short; MSFT tablet weighs on BKS, too

   

Barnes & Noble (NYSE:BKS) showed narrowed losses in its fiscal 2012 earnings report released Tuesday morning, but that wasn’t enough to keep shares from dropping around 5% by midday — and news of Microsoft’s (NASDAQ:MSFT) new tablet couldn’t have helped, either.

The net loss for Q4 was $57.7 million, or $1.08 per share — 3% better than last year’s $59.4 million duck into the red, but worse than the loss of 93 cents per share analysts expected for the quarter. Q4 revenues, although up from last year, also failed to meet expectations — analysts predicted $1.47 billion, while B&N brought in $1.38 billion.

Net loss on the year improved 7% from the prior year to $68.9 million, or $1.41 per share.

Sales in the retail segment, which now includes struggling BN.com while Nook sales are reported separately, were slightly up for the quarter but dropped 1.5% to $4.9 billion for the fiscal year.

Also weighing on BKS on Tuesday was the Nook.

The earnings report had plenty of good news: Comparable Nook sales increased 45% for the fiscal year, while digital content sales — including digital books, digital newsstands and the apps business — were up 119%. Quarterly growth metrics were 1% and 65%, respectively.

However, if you remember, Barnes & Noble announced a partnership with Microsoft earlier this year, and Newco — comprised of the company’s Nook digital and college-bookstore businesses — was born. Microsoft’s $300 million investment in the subsidiary provided a bit of hope for the struggling book retailer.

Many thought the partnership was meant to help Barnes & Noble and its Nook compete with Amazon’s (NASDAQ:AMZN) Kindle Fire and Apple’s (NASDAQ:AAPL) iPad — and many expected Microsoft to announce a joint B&N tablet to do just that. Instead, Microsoft flew solo on the project, announcing yesterday the creation of its own tablet, the Surface.

Uncertainty about the Nook and B&N’s lackluster earnings prompted investors to drive BKS shares to their lowest point since peaking May 1 on the announcement of Microsoft’s involvement, representing a loss of nearly 30% in roughly two months.


Article printed from InvestorPlace Media, http://investorplace.com/2012/06/barnes-noble-drops-on-earnings-surface-bks/.

©2014 InvestorPlace Media, LLC

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