Barnes & Noble considers separating Nook e-book business

Company warns of heavy losses for full year, disappointing Nook Simple Touch sales

Bookseller Barnes & Noble warned on Thursday that full-year losses will be worse than expected and said it is considering spinning off its Nook e-book business.

In a press release posted on its site, the bookseller said Nook holiday sales increased 70% over a year ago -- even though the Nook Simple Touch "lagged expectations" -- and that digital content sales increased 113% during the nine-week period ended December 31.

In order to capitalize on the rapid growth of the NOOK digital business, and its favorable leadership position in the expanding market for digital content, the Company has decided to pursue strategic exploratory work to separate the NOOK business.

“We see substantial value in what we’ve built with our NOOK business in only two years, and we believe it’s the right time to investigate our options to unlock that value,” said William Lynch, Chief Executive Officer of Barnes & Noble.

Probably true, but what really caught investors' attention Thursday was the full-year warning (which was buried in the press release, as if people wouldn't notice). Shares of Barnes & Noble (NYSE: BKS) plummeted as much as 31% to 9.35 after the company said it now expects a fiscal 2012 loss of $1.10 to $1.40 a share on revenue of $7.0 billion to $7.2 billion, with same-store sales growth - a key retail metric -- of just 1%.

Barnes & Noble in August forecast a loss of 10 cents to 50 cents, revenue of $7.4 billion and same-store revenue growth between 2% and 3%.

Remember, Barnes & Noble gave up trying to find a buyer last year. And its major big-box book retailer rival, Borders Group, filed for bankruptcy last February, shutting its doors for good last September.

It appears the collapse of the physical book industry is accelerating.

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