Len Riggio's latest plot twist for Barnes & Noble

The struggling bookseller's chairman wants to buy the retail operation and leave the rest separate. Could the Nook's days be numbered?

By Jonathan Berr Feb 25, 2013 1:21PM
Customers browse books at a Barnes & Noble Inc. store in Emeryville, Calif. (© David Paul Morris/Bloomberg via Getty Images)Whenever I read about the problems at Barnes & Noble (BKS), I can't help feeling a twinge of guilt.

I recall spending many a Saturday and Sunday afternoon thumbing through the huge racks of magazines at my local Barnes & Noble. I'd plop down with my reading material at one of the cafe tables and order a caffeinated beverage and a baked good. After I finished reading, I'd hand my dirty dishes to the cheerful staff and leave the magazines for someone else to put away.

The total cost of a day's entertainment -- less than $10.

Fast forward more than a decade, and the impact of freeloading customers like myself -- not to mention the likes of Amazon.com (AMZN) -- has taken its toll on the New York retailer. It reported a dismal holiday season with revenue falling 10.9% to $1.2 billion amid a disappointing performance from its Nook e-reader business. Change, though, is coming.

Chairman Leonard Riggio, the present-day company's founder and largest shareholder, is interested in buying Barnes & Noble's retail business. These 689 bookstores generated $996 million in sales in the quarter ended in October, while its college bookstores, which Riggio isn't gunning for, had $773 million in sales during that same period, according to Bloomberg News. In a separate development, The New York Times reported that Barnes & Noble may scrap its Nook e-reader because it has failed to spur sustained consumer interest.

Riggio's plan isn't without risk. For one thing, as CNBC noted, he would need the support of Liberty Media (LMCA), which acquired a stake in Barnes & Noble in 2011. Similar deals have also run into problems. Best Buy (BBY) founder Richard Schulze hasn't been able to get financing for his deal to take the beleaguered consumer electronics firm private. And some Dell (DELL) shareholders are balking at CEO Michael Dell's planned $24.4 billion buyout of the tech bellwether he's doing with Silver Lake Management, arguing it undervalues the company.

As for the Nook, its future has been cloudy for a while. Though Microsoft (MSFT) (Microsoft owns and publishes moneyNOW, an MSN Money site.) has invested $300 million in Nook, and the e-reader has gotten some favorable reviews, it has has failed to gain much traction against much larger rivals such as Apple (AAPL) and Amazon. Its chances for future success seem pretty dim.

Riggio, however, seems intent on writing at least one more chapter in the Barnes & Noble saga.

--Jonathan Berr doesn't own shares of the listed stocks. Follow him on Twitter @jdberr.

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Feb 25, 2013 5:12PM
If I go to an online bookstore, I expect generic national offerings - if I take the time to drive to Barnes and Nobles, I want things that are local in flavor - not the same generic garbage I can get online - get those several hundred bookstores into the local scene or go ahead and close the doors!
Feb 25, 2013 6:11PM
I went to buy a book and they wanted the retail price and wouldn't match their own online price.  Tried ordering online with in-store pick-up as their site was not clear about which price it would be.  What a waste.
Feb 25, 2013 5:32PM
obamas sinking this country how many more are going bankrupt while he spends taxpayer money on oscars fling his wife there w secret service on board
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