Nook may have to find own niche

– Barnes Noble is considering options for its quickly growing but expensive Nook e-book reading business, its latest attempt to regain profitability as the publishing industry adapts to the rising popularity of digital books and magazines.

Investors fled as the company also forecast a much bigger loss for the year than originally expected. The stock lost nearly a fifth of its value.

Barnes Noble has been investing heavily in electronic books and its Nook e-book readers as it faces tough competition from online retailers and discount stores. That business is growing as consumers increasingly shift to reading e-books. But it has led to losses for the New York-based bookseller.

CEO William Lynch said the Nook review is an attempt to provide more visibility into Nook operations, which Barnes Noble doesn?t believe are valued as highly as they should be by investors and analysts.

He said the company is looking at a ?range of options? for the Nook business, which the company expects to generate $1.5 billion in revenue in fiscal 2012. He declined to comment on whether the company was considering selling the business outright. The review is expected to be complete by the end of the year.

Barnes Noble is facing tough competition from Amazon.com, which offered its Kindle Fire for $199 and its Kindle e-reader for $79 over the holidays.

Barnes Noble sold its Nook Tablet for $249 and its black-and-white Simple Touch e-reader for $99. Demand for the Simple Touch reader lagged expectations during the holidays, Barnes Noble said.

Still, combined sales of Nook products were brisk, up 70 percent compared with a year ago during the nine-week period ended Dec. 31. Digital content sales more than doubled. The company expects those sales to total $450 million in fiscal 2012.

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