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Wednesday, July 10, 2013

Bugging the Strategizing Back-Rooms of Barnes & Noble

Customers at a Nook kiosk in a Barnes & Noble store. The company
said that it would no longer manufacture color tablets
Barnes & Noble is in a 'make-or-break' corner. Beat up pretty bad from its digital dalliance with the Nook e-reader --- bleeding blood-dollars from its coffers.

B&N wanted to expand its business in 2009 so they ventured into the digital field with the introduction of its first black and white e-reader, the Nook. The Nook had some initial success that convinced the B&N strategizers to further expand into more bells and whistles for the Nook --- But, this placed the Nook e-reader-turned-tablet into a field of bigger, heavier hitters which just overwhelmed the bookseller-recently-turned-digital-entrepreneur --- resulting in Barnes & Noble's digital plans being blown to hell.

"For the fiscal fourth quarter, the Nook unit showed a $177 million loss in earnings before interest, taxes, depreciation and amortization, or Ebitda, more than doubling the loss from the period a year earlier. Sales fell 34 percent, to $108 million."

On top of this, Mr. William Lynch, the tech wizard hired to run B&N's digital division, quit! Talk about pressure and intrigue.

So now Mr. Leonard Riggio, the chairman of B&N and the one who initially built the bookseller into a powerhouse, is once again in the captain's chair. He also cherishes the physical bookstores.

So you can just see the 'think tank' smoke billowing out of the B&N's boardrooms --- resulting, hopefully, in financial soundness for the last major bookstore chain. 

If B&N survives and grows, you will hear a universal sigh of relief emanating from publishers, authors and agents!

So, stay tuned!

More details by Julie Bosman in the New York Times:  

Fork in the Road for Barnes & Noble

William Lynch was brimming with the enthusiasm of a start-up entrepreneur. It was January 2012, and Mr. Lynch, Barnes & Noble’s chief executive, was showing off the company’s shiny Palo Alto, Calif., offices, a 300-person outpost that was the center of its e-reader operations.

He and other executives proudly displayed their new devices, talked about plans to expand and promised that the bookstore chain could go head-to-head with the giants of Silicon Valley.
“We’re a technology company, believe it or not,” Mr. Lynch said.
But only 16 months later, Barnes & Noble’s digital plans are crumbling. Last month, a disastrous earnings report coincided with the company’s announcement that it would no longer manufacture color tablets. And on Monday,Barnes & Noble announced that Mr. Lynch, the young, tech-savvy architect of the company’s digital strategy, had abruptly resigned. A new chief executive was not named.
That leaves the nation’s only major bookstore chain without a clear path forward, reviving fears among publishers, authors and agents — who are deeply dependent on a viable Barnes & Noble — about its future.
Barnes & Noble executives have acknowledged one fact: the digital business that was to be the centerpiece of its growth strategy must be retooled.
After introducing its first black-and-white e-reader in 2009, called the Nook, Barnes & Noble joined the tablet race, a move that industry experts have pointed to as a source of the company’s current troubles. Barnes & Noble’s inexpensive color tablets aimed for a niche in the market below the iPad. But while the company grabbed close to 25 percent of the e-book market, its digital division was getting pummeled by larger competitors, and bleeding money.
“Barnes & Noble was in a Catch-22. They had to do something in digital and Nook was their best shot at it,” said Peter Wahlstrom, a retail analyst with Morningstar Equity Research. “William Lynch had a good vision, but he was overwhelmed and fighting with one hand behind his back.”
Mr. Lynch’s departure, which was effective immediately, leaves Leonard Riggio, the chairman of Barnes & Noble, with a much more visible and powerful role within the company. Mr. Riggio, who built the company into a national force, is known to cherish the physical bookstores. His increased influence, analysts said, could shift the company’s focus more toward the retail side of the business.

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