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A Rocky Road Ahead For Barnes & Noble

Updated on February 19, 2014

There is no doubt that Barnes & Noble (BKS) is the most loved American bookstore today. It has survived many years of existence with impressive BKS earnings especially when all other American bookstore chains come and stumble down. However, the market has seen a tremendous problem when it comes to sales and profit based on Barnes & Noble stock news. The introduction of the Internet and other technological advancements has transformed readers. Instead of reading their favorite books as paperback, they would rather buy an eBook version of it. This trend has led to the demise of most American bookstore and the BKS stock price. Even in other countries, bookstores are seen to be replaced by the Internet. As a result, more and more bookstores are forced to close and declare bankruptcy.

This is the trouble that is plaguing Barnes & Noble today. The company tried to compensate through the creation of Nook. However, it was only good news at the start of Nook and its glitter quickly faded away as the competition got even tougher. BKS estimates that the Nook was overtaken by other brands such as Kindle, Kobo, Sony Reader, iBooks, and Samsung’s tablets. With the growing industry of smartphones and other mobile device, as what one Barnes & Noble stock analysis suggested, the Nook started to shrink in terms of influence and marketability.

Fierce competition is killing Barnes & Noble

According to BKS stock analysis, there are many examples that can be incited to show how competition can kill a business. Investors are very familiar with what happened to Best Buy as it was defeated by Circuit City. How about Facebook? 2014 is forecasted to be a year when Facebook will be dethroned by other rising social networking sites. With Google+, Twitter, Instagram, MySpace, and others fragmenting the social media, it is easy to conclude that Facebook will have to work even harder to stay on top of the competition.

So what about Barnes & Noble stock price? Since the time Amazon entered the competition, it seems that everything has changed. No one can really explain what is behind the success of Amazon. They say, it is like an art, it cannot be explained. Investors continue to pour down big amount of money on Amazon and it seems for BKS estimates that the company will try to trump others with its strong market presence.

When the Internet entered the picture

The Internet age has been a game changer. The success of BKS stock price has been attributed to its brick-and-mortar bookstore. However, people are now using technology to read what they like and not paperback books anymore. Based on Barnes & Noble stock news, Amazon recognized this trend soon enough that it has already made a great impact on the eBook industry well ahead before any other company can catch up.

This has been the problem for Barnes & Noble. The late recognition of the market shift has led to tremendous decrease of its annual profit. Even the holidays that Barnes & Noble predict to give them a boost on sale never met its expectation.

The market of eBook readers has been saturated already when Barnes & Noble stock price entered the market. When it introduced its very own Nook, there are at least five major eBook readers that are in place. Though the initial months the Nook was introduced made an optimistic forecast and high BKS earnings, it never sustained its success. Most people see Nook as an unnecessary addition to the eBook reader line-up. Since there are already many eBook readers, then there is really no need for another brand to join in the club, as stated in BKS stock analysis.

With all these being said, it is never too late for Barnes & Noble. There is still hope for this company if it is able to find feasible strategies to outlast the competition, according to BKS stock news.

A little bit information about Barnes & Noble Nook

The Nook is created and developed by Barnes & Noble. Based on Barnes & Noble stock news, it is exclusively for American users and it runs with the Android platform. The nook was released in October 2009 with the original intent to increase the sales of Barnes & Noble and to outperform other competitors.

The first few years of Nook were very good according to Barnes & Noble stock analysis. In 2011, it has earned $920 million and dominated 13% of the international market for eBook readers. In addition to this, other competitors of Barnes & Noble made a surprising decision to support the Nook and thus, further increasing its value and BKS stock price. Moreover, Microsoft and Pearson made a lot of investment as well on Nook, an investment as high as $1.8 billion.

As of now, there are at least three types of Nook device. These are the Nook GlowLight, Nook HD, and Nook HD+. Each of these devices has its own advantages and disadvantages.

There are also discontinued products. Based on BKS stock news, these include Nook 1st Edition, Nook Simple Touch, Nook Simple Touch Reader with GlowLight, Nook Color, and Nook Tablet.

However, as impressive as it may sound, the performance of Nook and Barnes & Noble stock are never enough for the company to get back the money they invested. As BKS estimates implied, they spend too much on the Nook and yet the return of investment is not enough to pay off the debts.

What happened to the Nook?

It is very worth noting that Nook has been the success and failure of Barnes & Noble. This may sound confusing, but Nook has the potential to let Barnes & Noble out from deepwater. It is the best way to stay afloat, sustain BKS earnings, and even rise above the competition – if Nook has just been promoted and advertised properly.

So what happened to Nook? What led to its failure?

The Nook is originally an E-paper reader. However, the technological advancement of the time seems to leave behind those companies that can’t keep up, as stated in one of the BKS stock news. Since the market quickly shift from eBook readers to tablet technology, the demand is transferred to mobile devices with multiple functions. Thus, a tablet with only reading features is not really a good choice. People want to get more out of their device and out of Barnes & Noble stock price. Thus, the Nook simply does not have to compete with the E-paper reader only, but also to the whole mobile device industry!

The competition is too much for the Nook. It is only a matter of time for the Nook and BKS stock to bleed to death. As a matter of fact, the Nook is one of the major problems that Barnes & Noble or BKS has to face. With every single Nook it sold, the loss is bigger than the gain as evidenced in BKS stock analysis. Thus, the Nook has led to the $300 million loss for Barnes & Noble.

Another problem for Nook

Like what was already mentioned in BKS stock news, the Nook is not sold outside of the United States. If a person outside of the US will order a Nook, that person needs to order it outside from the official website of Barnes & Noble. Thus, a person would only have to order the Nook from eBay, Craigslist, shopreader.com, and other third-party retail stores. This results to the diminishing availability of the device as mentioned in Barnes & Noble stock analysis.

Since the Nook is not available outside of the US, a customer cannot register the device instantly. Of course, people will have to go through a great length before it can register its device such as using a fake US address, as reported by Barnes & Noble stock news.

There are some issues as well when it comes to Nook and Barnes & Noble stock price. If a consumer opens a lot of books, it will eventually crush. In addition to this, if the credit card that a consumer uses expires, the purchased book will not be available anymore, unless a new credit card will be attached to that person’s account. There are also compatibility issues that had been raised. The device is said to prevent other external programs from operating. Thus, it can be very annoying to organize too many books.

Barnes & Noble forsook Nook

With the growing concern over the Nook, BKS made a decision to stop its in-house production of the device. This is one of the major decisions that Barnes & Noble made for the last few years.

Because of the Nook being more of a liability rather than an asset, Barnes & Noble stock announced its desire to stop producing Nook and let a third-party company do the production – just in case, if ever there is a company who would like to catch the brand.

Effects of Dropping Nook

The decision made by the Barnes & Noble made a negative impact on its BKS stock. Based on the analysis, there had been a 16% decrease in the BKS earnings when the announcement was made. Though the Nook was already ditched away by the company, Barnes & Noble is still being dragged down by it. Some analysts have said that even though the initial reaction of the BKS stock price dropped down, it will not be long. The drop in stock is expected as Nook has increased the overall asset of the company.

How about the retail division of Barnes & Noble?

Now that Barnes & Noble stock already forsook its Nook, it will have more energy to focus on its brick-and-mortar stores. However, it is an ugly sight as well for the company when it comes to its retail division. Just like what was always mentioned here, the consumers are not into buying paperback books anymore. BKS estimates state that they would prefer reading books on their devices.

More trouble for Barnes & Noble

More and more challenges are also heading in the way of Barnes & Noble. First, the majority of Barnes & Noble’s stores are college bookstores. In fact, there are more college bookstores than ordinary stores that BKS stock have. As of April 2013, Barnes & Noble has 675 stores and 686 college bookstores. Barnes & Noble retail division is also declining. Therefore, Barnes & Noble does not only have to worry about its tablet business, but also a decline on its retail department, sluggish college business, and overall decline in sales as some BKS stock analysis noted.

Any hope for Barnes & Noble?

There is still hope for Barnes & Noble stock. There is one thing that the competitors of Barnes & Noble do not have and that is physical presence. True enough, Amazon dominates the online stores for books, but people are still more attracted with brick-and-mortar stores. Barnes & Noble is the only one bookstore retailer in the United States that is well loved by many consumers. Barnes & Noble is a trusted brand for many years and it will stay to be that way because in this area of the industry, Barnes & Noble is the reigning king.

There is still a trump card for BKS. According to forecasts, Americans will still need to go to physical store because it is the traditional way commerce is done. Americans are expected to spend mover $600 billion during the holidays and only 14% of that figure will be spent online. There are still many people who will prefer to do business with a real person rather than doing business with a machine.

What should Barnes & Noble do?

The key here is for BKS stock to keep its expenses at the minimum level and to maximize its budget as much as possible. In addition to this, Barnes & Noble should capitalize on the strengths they have such as the physical presence they own. The company has already achieved something that no other American bookstore has ever made based on Barnes & Noble stock analysis. It needs to grow again from that point and slowly, but surely make improvements on its sales.

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