Source: Barnes & Noble.

Barnes & Noble (NYSE:BKS) rose by a big 5.3% on Wednesday, as investors reacted with optimism to the company's latest earnings report and news regarding the coming spinoff of its Nook business. However, the Nook is fighting an uphill battle versus stronger companies such as (NASDAQ:AMZN) and Apple (NASDAQ:AAPL), so Barnes & Noble is still in a very difficult position, with or without the spinoff. 

Lackluster performance
Financial performance during the quarter ended on May 3 was nothing to write home about. Total sales increased 3.5%, to $1.32 billion, versus $1.28 billion during the same quarter in 2013. The number was above analysts' forecast of $1.19 billion in revenues for the quarter.

But the company is still losing money, and the net loss was actually bigger than expected during the period. Barnes & Noble reported a net loss of $36.7 million during the quarter, and net loss per share came in at $0.72, worse than the net loss of $0.63 per share that Wall Street analysts expected on average.

The retail segment delivered revenues of $956 million, increasing 0.8% versus the same quarter in the prior year. However, core comparable-store sales in the retail segment, which exclude sales of Nook products, decreased 1.9% during the quarter.

The college division produced revenues of $298 million during the quarter, a big annual increase of 18.2%. But most of this increase was due to timing of the back-to-school rush season. When comparing sales figures in the college segment on an annual basis, performance was much weaker. College sales during the year ended on May 3 fell 0.9%, to $1.75 billion.

Nook sales declined by a big 22.3% to $87.1 million. When considering numbers adjusted for the elimination of intercompany sales from Nook to Barnes & Noble retail and Barnes & Noble college on a sell-through basis, the decline was a more moderate 11.6%. But the trend still doesn't look very encouraging.

Management is not expecting any material improvements in the coming year. During fiscal 2015, the company expects retail comparable bookstore sales, core comparable bookstore sales, and college comparable-store sales to decline by the low single digits.  Barnes & Noble is forecasting reduced EBITDA losses in the Nook segment during the coming year.

The spinoff: Nook vs. Amazon and Apple
Management is ready to move forward with the Nook spinoff, a move that investors have eagerly awaited in recent years. Says CEO Michael Huseby:

We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of Nook Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. 

To the extent that Nook can be considered a more attractive business than Barnes & Noble's retail division, a spinoff could be a convenient move, as it could maximize shareholder value by creating a clear separation between the two segments. 

However, Nook has not achieved much so far, and it's fighting a very difficult battle against Amazon's Kindle products and Apple's popular iPad tablets.

The Nook and Nook Tablet compete in the same price range as Amazon's Kindle and Kindle Fire products. Tech specifications are quite similar, but Amazon is a much bigger player, with a widely recognized brand and a huge market position in e-books. 

The online retailer announced media sales of $2.82 billion in North America during the first quarter of 2014, a 12% increase versus the same period in the prior year. This segment includes not only books, but also other products such as movies, music, software, and video games. However, it still sounds like a safe assumption to say that Amazon is most likely inflicting serious damage on Barnes & Noble considering these figures.

Apple's iPad products are typically more expensive than Amazon's Kindle or Barnes & Noble's Nook models. However, at a starting point of $299 for an iPad Mini, the price gap may still be acceptable for many consumers.

Apple is one of the world's most popular brands, and the company has a loyal fan base and a reputation for quality. In addition, Apple devices are supported by a deep and powerful ecosystem, and this is a crucial competitive advantage in the business.

The Nook division is still a money loser with declining sales and facing huge competitive pressure from giants such as Amazon and Apple, and that's not going to change because of the coming spinoff.

Foolish takeaway
Barnes & Noble is delivering weak financial performance in its various segments. The Nook spinoff is not necessarily a bad move, but the division is reporting falling sales while facing remarkably tough competition from Amazon and Apple. The recent announcements from Barnes & Noble are hardly a game changer for investors considering a position in the company.