Barnes & Noble, Inc. (BKS) Turnaround?

Page 1 of 2

Barnes & Noble, Inc. (NYSE:BKS) reported a 94.2% decline in earnings before interest, tax, depreciation, and amortization. Meanwhile, the stock rallied in the Wednesday trading session by 4.3%. How can a stock rally after the company reported a 94% decline in earnings year-over-year? But, believe it or not, there are a lot of positives when it comes to investing into the company.

Barnes & Noble, Inc. (NYSE:BKS)Earnings highlights and forward-looking analysis

The company is planning on spinning off its Nook segment. Well not exactly spin-off, but develop partnership agreements whereby a company would be taking on all of the risks, and costs, of operating a tablet business. What Barnes & Noble, Inc. (NYSE:BKS) will supply is distribution of the tablet device in its stores, certain software features like the Barnes & Noble, Inc. (NYSE:BKS) reader app, and the Nook brand. This will lower the amount of money lost from the Nook business segment. The company reduced its Nook-segment-related spending by 34%.

The company reported a 5.9% decline in revenue year-over-year because there weren’t any blockbuster book hits that could replace the Hunger Games and Fifty Shades of Grey. On the other hand, it was able to grow revenue in its college segment by 10.7%. The college segment is going to be the company’s fastest-growing business segment.

Going forward, the Nook will lose the company less money. Barnes & Noble, Inc. (NYSE:BKS) will continue to close losing retail stores and will continue to grow its college-book campus business. Analysts on a consensus basis anticipate earnings to grow by 61.9% in the current fiscal year, which will have to be driven by falling costs.

Microsoft Corporation (NASDAQ:MSFT) the potential partnership contender

Microsoft Corporation (NASDAQ:MSFT) could be the potential contender for partnership. The company was hoping to buy out the Nook business for $1 billion. But the next best alternative is to take on the risk of developing, marketing and selling Nook devices.

The Nook has an established market presence, and all it really needs is broader distribution. The technological sophistication of Microsoft Corporation (NASDAQ:MSFT) and its success in consumer electronics clearly demonstrates that the company could turn the Nook into a more successful business.

Source: Statista

The Barnes & Noble, Inc. (NYSE:BKS) Nook HD commands 8% market share. Going forward Barnes & Noble is hoping to collect revenue from media sales. If that is the case, then its partnership with Microsoft could be lucrative. Microsoft will get a device that has an established market presence and distribution channel.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!