There was a lot up against Barnes & Noble (BKS) this quarter. The same, of course, could have been said for B&N's past several quarters, if not the past several years. Amazon has continued its onslaught of the publishing industry, even while lessening its hold on selling books. This quarter, B&N saw its overall sales drop even further, to roughly $1.7 billion, but despite all that, still managed to see a profit, while peers like Books-a-Million had little to nothing good to report. Is there hope for Barnes & Noble as an investment, or is this boost in profit simply a fluke?

The state of the terrain
It's no secret that the general book business is declining. Barnes & Noble has tried its darnedest to diversify its revenue stream with sales of its Nook e-reader, but even having Microsoft's 17.6% stake hasn't helped all that much- sales for the device are down 32.2% compared to a year ago, on reports of both fewer device and digital content sales.

Barnes & Noble execs also claimed that this year's content terrain is a bit more bleak than it had been this time in 2012, when mega sellers like the Fifty Shades of Grey trilogy were recently released. Even though B&N has released a new Nook product for Microsoft's Windows 8.1, and also launched a new Nook Glowlight device, it still can't quite seem to generate enough revenue to pick itself up from this sales slump.

What's behind the profits
One redeeming feature on B&N's last report was its ability to boost its profit margins, differentiating itself from fellow struggling bookseller Books-a-Million. While that company reported operating and net losses of over $7 million with sales of just over $100 million, Barnes & Noble actually managed to improve these metrics. Operating profits for the quarter clocked in at $21.9 million, a significant improvement from last year's Q2 of $8.9 million. Net profit, meanwhile, jumped from $501,000 to $13.2 million.

Those statistics might look impressive, but they have a negative point of origin. Barnes & Noble reported that it reduced its operating margin by $31 million this quarter because of strong expense management. These management methods included payroll related costs, or rather, pay cuts and job losses.

Will it ever be a good investment?
Even the good news on Barnes & Noble's financial statements had a pessimistic edge to it this quarter. Yes, the company is learning how to better retain earnings from the dropping revenues it brings in, but that improvement is falling on the heads of its employees. There doesn't seem to be any sign for improvement on the horizon, unless Microsoft follows through with its rumored desire to acquire the entire Nook division, itself rapidly losing sales as well. In the meantime, it's probably best to leave this book on the shelf, at least until a next chapter develops.