Nook Spin-Off Cuts Losses For Barnes & Noble

Barnes & Noble Inc. BKS unveiled plans to spin off its struggling Nook digital unit in a move that sent shares up nearly 10 percent in pre-market trading. Nook has proven a drag on Barnes & Noble's results and it expects to complete the deal by the first calendar quarter of 2015. Although only a fraction of the company's core business, Nook's revenue fell more than 32 percent in fiscal 2015 to $507 billion. Its EBITDA loss was cut roughly in half to $217.6 million from a year earlier. Barnes & Nobel posted total revenue Tuesday of $6.38 billion for fiscal 2014, down nearly 7 percent. Nook device sales fell 44.8 percent for the year to $260 million while digital content fell more than 20 percent to $246 million. Regarding the spin-off, Huseby said he expects the company to have a 'long-term relationship" with Nook. But "we have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately," Huseby added. Nook launched its e-reader device in 2009 and has since sold about 10 million of the devices. But Amazon.com, Inc. AMZN and others appeared to out-compete. Barnes & Noble opted against introducing a new model of the e-reader for the 2013 Holiday season and earlier this month it signed a co-branding agreement for the devices with electronics manufacturer Samsung SSNLF. "We're pivoting away from being a hardware-centric business,” Chief Executive Michael Huseby said at the time. “Our objective is to sell content.” Microsoft Corp MSFT has a 17.6 percent stake in Nook Media, although its shares appeared unaffected by the announcement. Barnes & Noble traded recently at $22.35 up 8.7 percent.