Rocket Bomber - article - retail - business - Nook speculation at this early stage is dangerous - and likely useless

Full Disclosure: Barnes & Noble signs my paychecks, and I own trivial amounts of BKS through a company sponsored 401(k). But I am field management, in stores, and so not privy to corporate secrets past what both you and I can both read in press releases.

So, B&N: in Thursday’s press release they said

“In order to capitalize on the rapid growth of the NOOK digital business, and its favorable leadership position in the expanding market for digital content, the Company has decided to pursue strategic exploratory work to separate the NOOK business.”

and two ‘graphs later

“There can be no assurance that the review of a potential separation of the NOOK digital business will result in a separation. There is no timetable for the review, and the Company does not intend to comment further regarding the review, unless and until a decision is made.”

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of course others have commented; a small sample:

http://news.cnet.com/8301-1023_3-57354321-93/barnes-noble-ceo-were-committed-to-the-nook/
http://dealbook.nytimes.com/2012/01/06/with-nook-plan-barnes-noble-sets-out-possible-shake-up/
http://seekingalpha.com/article/317961-why-barnes-noble-needs-to-keep-the-nook?source=yahoo

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I think the main thing that prompted the announcement was 1st: full legal disclosure. They are legitimately looking into this, & I’m sure there is an SEC rule that requires them to say so.

But, a decision to “separate” the Nook business could include operating the digital division as a wholly owned subsidiary, spinning off the business [issuing stock in a new Nook company to all current B&N shareholders], selling it outright, or something less revolutionary, like doing some basic math/accounting to list nook as a separate line item in B&N annual reports.

Or nothing. Nothing is an option.

I think the main thing that B&N wanted to accomplish with this announcement was proper consideration. Some props for what they’ve done in 2 short years – A wholescale reevaluation by both pundits and investors in the business. It could be a thinly veiled message direct to Liberty Media, asking them to invest another half billion to buy the whole company outright (or to buy the nook business, unbundled)

At any rate, much like the announcement made that B&N was considering “strategic alternatives” up to and including a sale, which made the news last year.

If you were to ask my opinion, I must demure: that would be too much like investment advice. But I’m not quitting my job as a bookstore manager, or cashing out my 401(k).