NEW YORK (AP) — Shares of Barnes & Noble Inc. stumbled Friday, extending a pummeling they took Thursday as the bookseller disclosed it was mulling options for its fast-growing but expensive e-book business and Nook readers. The company also had forecast a much bigger loss for this year than originally expected.
THE SPARK: After the dust settled Thursday, investors appeared to find value in the company, and some analysts perceived that it may not have lost e-book market share as sharply to Amazon.com Inc. over the holidays as was thought. Janney analysts maintained their "Buy" recommendation for Barnes & Noble stock, saying there was no sign that the company lost "meaningful" e-book market share and that it does have competitive advantages.
THE BIG PICURE: Barnes & Noble has been investing heavily in electronic books and its Nook readers as it faces stiff competition from online retailers and discount stores. That business is growing as consumers increasingly shift to reading e-books. But it is not yet profitable.
The New York-based company faces tough competition from Amazon, 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 lagged expectations during the holidays, Barnes & Noble said. Still, combined sales of Nook products were brisk.
The company didn't say whether it was considering selling the Nook and e-book business.
THE ANALYSIS: As long as Barnes & Noble maintains its e-book market share in the US in the high range of 20 percent, the company will draw value either from its Nook platform or its retail business, depending on how fast e-books grow, Janney analysts David Strasser, Sarang Vora and Darren Bassman said in a research note. They see competitive advantages for the company in its store network to sell Nooks and its strong relationship with publishers.
Given its technology platform and e-reader customer base, "We believe there is significant value in this business that can be unlocked," the analysts wrote. They did widen their estimate for Barnes & Noble's loss for the fiscal year that will end April 30, to $1.29 a share from 59 cents previously.
The company on Thursday cut its yearly guidance for earnings before interest, taxes, depreciation and amortization, a financial measure known as Ebitda, to between $150 million and $180 million. In December it said that figure would be at the low end of the range of $210 million to $250 million. Barnes & Noble expects a yearly loss of $1.10 to $1.40 per share on total sales of $7 billion to $7.2 billion — compared with its forecast in August of 10 cents to 50 cents.
SHARE ACTION: Barnes & Noble shares slipped 5 cents to close Friday at $11.19, recalibrating after day when they had reached as high as $12.13, an 8 percent gain, and as low as $10.87. The shares have traded between $8.45 and $21.06 the past 52 weeks.
Amazon.com shares rose $5, almost 3 percent, on Friday to close at $183.61.