Barnes & Noble's Warning for

Barnes & Noble  (NYSE: BKS  ) couldn't quite make its tablet business work. The market proved too competitive, too expensive, and too risky. In the end, the retailer failed to sell enough Nooks to get to profitable scale, and to power those all-important content sales.

The Nook's digital business fell by 8.9%, thanks to lower device sales and a tough comparison with last year, when customers were snapping up popular titles like The Hunger Games.

Thanks, Kindle
A lot of those Nook tablet struggles came at the hands of  (NASDAQ: AMZN  ) , and the success it managed with its Kindle devices. The online retailer's tablet and e-reader lineup dominated its own sales lists, snatching the top four spots of its best-selling products worldwide last year. In fact, every one of Amazon's top 10 best-selling items last quarter were either digital or Kindle-related. That's what a strong ecosystem looks like.

Still, Amazon might soon be feeling the same content pinch that its bookselling rival has this year. In other words, Barnes & Noble's shrinking digital content revenue could be a sign of weaker sales growth ahead for Amazon.

It's true that the retailer is having no trouble moving its tablets and e-readers. But it is still seeing stalling growth from its media business, which includes e-books and other downloads. Last quarter -- when digital content sales should have been jolted by a rush of new device owners filling their tablets with digital stuff -- Amazon's media business chipped in just 12% of its total revenue growth. A year ago, that figure was a much stronger 22%.

Source: financial filings and author's calculations.

Most of that slowdown came from Amazon's international media business, which grew by just 1% last quarter. Media sales in the United States rose by a more respectable 14%, but that was still slower than the 17% growth Amazon booked in the year-ago quarter.

If consumers, particularly in the U.S, are scaling back on their digital content purchasing, then that poor sales growth trend will continue. Investors will find out if Amazon bucked the trend later this month when it reports its earnings results.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2518047, ~/Articles/ArticleHandler.aspx, 9/27/2016 6:59:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 9 hours ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:00 PM
AMZN $799.16 Down -6.59 -0.82% CAPS Rating: ****
BKS $10.96 Down -0.02 -0.18%
Barnes and Noble CAPS Rating: *