Barnes & Noble: Nook market share, sales surge, but so do losses

Summary:Barnes & Noble CEO William Lynch said that the company's e-book market share is now 26 percent to 27 percent in the U.S. with Nook-related revenue topping $250 million in its fiscal fourth quarter.

Barnes & Noble CEO William Lynch said that the company's e-book market share is now 26 percent to 27 percent in the U.S. with Nook-related revenue topping $250 million in its fiscal fourth quarter.

Lynch, speaking on a conference call with analysts following the company's earnings report, said:

Our data indicates that for the sixth consecutive quarter we continued to gain significant market share in the fast emerging eBook and digital newsstand market -- faster, in fact, than any other company over that period. Our internal figures corroborated by analyst estimates, indicate we grew our market share of eBooks another 1 to 2 points in Q4. It now represents approximately 26% to 27% of the overall US market for eBooks. Led by the ongoing success of NOOK Color as well as the growth of eBook sales through our NOOK Bookstore on BN.com and via our free NOOK reading apps on third-party devices, we continue to add millions of new NOOK users each quarter. A few other recent data points of note on our digital business . Our overall NOOK business across devices, accessories, and additional content grew to over $250 million in comparable sales across retail at BN.com in Q4. That delivered close to 300% growth versus last year. As mentioned, BN.com's gross margin gross profit expanded quarter-to-quarter from 9.5% to 13.2%, illustrating the quickly scaling digital content business model. We now sell 3 times as many digital books as all formats of physical books combined on BN.com.

Not too surprisingly, Lynch talked up the company's latest 6-inch Nook reader and a software update that made its color Nook operate more like an Android tablet. The company said it opened 1 million new Nook accounts in the fourth quarter. That sum includes apps and devices.

Lynch added that the company's digital business model is coming into view and should grow revenue and gross margins going forward.

For the fiscal fourth quarter, Barnes & Noble reported a net loss of $59 million, or $1.09 a share, on revenue of $1.37 billion. For fiscal 2011, Barnes & Noble reported a net loss of $74 million on revenue of $7 billion. Those results missed Wall Street estimates.

Barnesandnoble.com reported fiscal 2011 sales of $572.7 million, but has negative earnings before interest, depreciation, amortization and interest of $204.5 million.

No outlook was given for fiscal 2012 given that Barnes & Noble is in takeover talks with Liberty Media.

Related:

Hands-on review: All-new B&N Nook e-book reader (photos)

Topics: Mobility, Enterprise Software, Hardware

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Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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