B&N, Microsoft Cut Nook Ties

Bookseller plans further Nook cost rationalization, potential sale
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New York — Barnes & Noble has taken steps to further restructure and potentially sell off its ailing Nook tablet, e-reader and digital-book business.

The company restructured its Nook Media agreements with Microsoft to “enable the company to further rationalize the Nook business and provide a clearer path for the potential separation of our retail and Nook Media businesses,” B&N announced.

B&N agreed with Microsoft to acquire Microsoft’s preferred interest in Nook Media and terminate its commercial agreement with Microsoft. The change relieves Microsoft “of any obligation to continue to fund support and other payments set forth in the commercial agreement between the partners,” B&N said.

The termination “will allow the company to continue its rationalization of the Nook Digital business and enhances Barnes & Noble’s operational and strategic flexibility,” the company continued.

In the fiscal second quarter ending Nov. 1, the Nook segment (including digital content, devices and accessories) generated $64 million in sales, down 41.3 percent from the year ago. Device and accessories sales were down 63.7 percent to $18.7 million, and digital content sales were down 21.2 percent to $45.2 million, primarily because of lower device sales.

Nook’s EBITDA losses fell 16.8 percent to $38 million because of cost-rationalization efforts, the company said.

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