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B&N nevertheless remains optimistic about Nook's future
Barnes & Noble has problems. It’s had problems for a while now, and all signs point to Nook. The company’s Nook division has been struggling for a couple of years, and now it looks like the jig is just about up. Barnes & Noble is laying off some (not all) of its Nook engineering staff, according to a report from Business Insider.
Barnes & Noble confirmed the news, but noted that not all of the engineering staff has been laid off (though the company didn’t share further details about how many people got the ax).
Barnes & Noble said in a statement to BI:
"We’ve been very clear about our focus on rationalizing the Nook business and positioning it for future success and value creation. As we’ve aligned NOOK’s cost structure with business realities, staffing levels in certain areas of our organization have changed, leading to some job eliminations. We’re not going to comment specifically on those eliminations."
The news comes just weeks after Barnes & Noble revealed dismal holiday sales that were weighed down by massive Nook losses. In the nine-week period ending December 28, Nook sales were down a whopping 60.5% to $125 million. Of that, devices and accessories were down 66.7% to $88 million while digital content sales fell 27.3% to $36.5 million.
Consequently, Nook was the worst performing Barnes & Noble segment. In fact, if the entire Nook division was removed from Barnes & Noble’s holiday sales numbers, its overall business would have been fairly stable.
Newly installed CEO Michael Huseby (who was head of Nook Media until January) pointed out that that’s because B&N didn’t put out a tablet this season like it did last year.
Indeed, the company revealed last summer that it will no longer manufacture Nook tablets in-house, but will move to a “partner-centric” model. The Nook e-readers, Simple Touch and GlowLight, will continue to be manufactured in-house, and Barnes & Noble is selling its existing tablet inventory, but good luck with that.
Following that announcement, then CEO William Lynch announced his resignation. In the months since, three other B&N executives have bailed, including director of digital products Jamie Iannone, VP and GM of global e-books Jim Hilt, and VP of digital products hardware engineering Bill Saperstein.
While it seems obvious that the Nook segment is on its way out, CEO Michael Huseby remains optimistic. In an earnings call last August, Huseby maintained that the problem isn’t with the devices themselves, but with management.
"The problem was that the decisions that were made by management quite frankly, in terms of the demand forecast, in terms of what was thought to be good information,” said Huseby.
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