Barnes & Noble's Nook business seems to be on life support.
The company reported on Wednesday that the Nook division saw sales drop 50.4 percent in the fiscal third quarter ended January 25, from $316 million last year to $156.9 million this time around. Despite the revenue drop, the Nook business saw an improvement in its earnings, jumping 67.5 percent from a loss of $190.4 million in last year's third fiscal quarter to a loss of $61.8 million during its most recent period.
The chief culprit in the Nook decline was hardware itself. The tablets and e-readers could only muster $100 million in sales during the period, dropping 58.2 percent compared to the prior year. Digital content sales were down 26.5 percent. Despite the drop in sales, Barnes & Noble isn't giving up on Nook. Newly appointed CEO Michael P. Huseby said the company is committed to its e-readers and taking steps to reverse the sales decline.
"The company is actively engaged in discussions with several world-class hardware partners related to device development as well as content packaging and distribution," said Huseby in a statement. "As a result, we plan to launch a new NOOK color device in early fiscal 2015."
Looking ahead, Barnes & Noble said it needs to make more decisions on reducing expenses. The company indicated that it reduced staff levels in the Nook business just after the quarter ended and that "these ongoing efforts may involve additional actions."
Barnes & Noble's Nook business, however, wasn't alone in disappointing its executives. Every part of the company's operation, including retail and college, were down during the period. The company's revenue dropped by 10.3 percent to $2 billion in the quarter. Still, the bookseller managed to make a small profit. Its third quarter net income was $63.2 million, or 86 cents per share, compared to a net loss of $3.7 million, or a loss of 14 cents per share, in the year ago quarter.
Update, 7:28 a.m. PT: Added statement from Barnes & Noble CEO Michael P. Huseby.