Barnes & Noble did it all for the Nookie
In the call with analysts, Mr. Lynch was pressed on whether Barnes & Noble's digital content was really proprietary. Mr. Lynch acknowledged that what the bookseller possessed was the ability to sell publishers' content, but he insisted that it was "a strategic asset that is hard to replicate."
Wall Street seemed heartened by the company's acknowledgment that it needed to recalibrate its device business, perhaps anticipating that it would accelerate a breakup of the device and retail units. Shares of Barnes & Noble rose 3.35 percent, to close at $15.74.
Despite the shift in digital strategy, Mr. Lynch emphasized that the company was not abandoning the Nook division.
"Nook Media has been financing itself since October of 2012 due to the strong investment partners we've been able to attract in Microsoft and Pearson," he said. He added that the Nook segment and the physical book stores drove traffic to each other and needed to remain in partnership.
But analysts sounded a skeptical note. "Barnes & Noble stands at a fork in the road and rather than choose one path, it will likely need to split into two companies and let the retail business go down one path while freeing the Nook division to go down another," said Mr. McQuivey, of Forrester. "There's no guarantee that either path will lead to the promised land, but the two units are facing such different challenges and such unique prospects that it doesn't make sense for them to try to work together to solve such different problems."