Barnes & Noble to Exit Tablet Hardware Business

Retail bookseller Barnes & Noble (NYSE: BKS  ) today announced that it will be exiting the tablet hardware business, discontinuing its Nook tablet lineup.

The company made the disclosure as part of its earnings results, as the Nook segment's revenue fell 34% to $108 million in the fourth quarter. "Device sales declined during the fourth quarter due to lower selling volume," said the company. "Digital content sales increased 16.2% for the full year, however, they decreased 8.9% for the fourth quarter due in part to the device sales shortfall as well as the comparison to the The Hunger Games and Fifty Shades of Grey trilogies a year ago."

B&N said it hopes to reduce losses in the business by partnering with third-party manufacturers to sell co-branded devices. It said it will continue to make its more basic, black-and-white e-readers but farm out the tablet manufacturing to a third-party.

"We know this is a sizable change from our existing strategy," CEO William Lynch said in a call with analysts. He declined to give specifics on how the tablet partnership would work because the company is in discussions with "a lot of interested parties."

According to research firm IDC, Barnes & Noble's tablet shipments fell to 1 million in the fourth quarter, down from 1.4 million a year earlier.

Barnes & Noble will continue designing Nook e-readers like its Simple Touch and Glowlight devices, but the color tablet market is proving too competitive. The company will sell through its existing Nook tablet inventory, and continue offering support and software updates for Nook customers.

Nook device sales and digital content sales both declined in the fourth quarter.

-- Material from The Associated Press was used in this report.

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