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Didn't get a Nook for Xmas? That's OK, hardly anyone else did, either

Barnes & Noble's ebook reader biz hammered in holiday sales disaster

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The fortunes of Barnes & Noble's Nook division have gone from bad to worse, with the ebook group reporting plummeting revenues over the holiday period.

The bookseller said on Thursday that the Nook unit's sales for the nine weeks ending December 28 were down 60.5 per cent from the same period a year ago.

Newly minted Barnes & Noble CEO Michael Huseby – who was elevated to the chief exec slot on Wednesday after having served as head of the company's ailing digital division – did his best to put on a brave face in a canned statement released on Thursday.

"Sales in the NOOK segment declined year-over-year largely because during the previous holiday season the company introduced two new tablet products, while no new tablets were introduced this year," Huseby said.

To be precise, B&N axed its tablet line in June, having managed to capture a mere 1.9 per cent of the fondleslab market during last year's holiday shopping season.

Since then, the company has released only one new device: the Nook GlowLight, a minor update of its E Ink reader featuring a higher-resolution screen and an improved illumination system.

It has also been clearing out its device inventory at deep discounts, selling the earlier-generation Nook Simple Touch with GlowLight for just $49 during a "Cyber Monday" promotion following the US Thanksgiving holiday.

Neither effort seems to have encouraged new customers to buy into B&N's ebook ecosystem, however. Ignoring digital content sales, sales of Nook devices and accessories were down 66.7 per cent from last year's holiday period.

Revenues from digital content didn't suffer quite as badly, with sales down 27.3 per cent from the year-ago period – a decline B&N attributes to the combination of reduced hardware sales and lower average sale prices for digital content.

But content sales alone won't rescue the Nook division. Even with dramatically reduced sales volume, device sales accounted for $88.7m of the group's revenue for the holiday period, or 71 per cent of the $125m total.

By comparison, B&N's core retail business, including its bookstores and its e-commerce site, brought in revenues of $1.1bn during the holiday period. And while that, too, was a decline, retail sales were only down 5.5 per cent from the year-ago period – a far cry from the massive slump experienced by the Nook division.

Meanwhile, Amazon – arguably the biggest competitor to both B&N's retail business and its Nook division – reported revenues up 24 per cent year-over-year for the third quarter of its fiscal 2013 in October, and is expected to report its fourth-quarter earnings toward the end of January.

B&N will report its full third-quarter results, including the holiday period, on or around February 27 – but shareholders probably shouldn't get their hopes up. ®

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