Friday, November 18, 2011

Barnes & Noble Sees Bright Future in Digital

Barnes & Noble sees it sales of e-books rising from about $250 million in 2010 to over $2 billion in 2015, according to a presentation made by CEO William Lynch at Liberty Media’s investor meeting Thursday. While e-book sales are expected to skyrocket, sales of print books through B&N are expected to fall from about $3.6 billion in 2010 to about $2.8 billion in 2015, Lynch reported.
Despite the decline in print sales by 2015, B&N sees its share of the print book market growing over the years from an estimated 17% in 2010 to 20% in 2015 due in part to the closure of Borders and what it believes will be the decision by large chain stores that currently sell books as a sideline to abandon the business. As the company said in September when it reported first quarter results for fiscal 2012, it expects the demise of Borders to boost store sales between $300 million to $400 million on an annual basis. Based on industry forecasts, B&N sees the overall print book business falling from an estimated $21 billion in 2010 to $14 billion in 2015, while e-book sales rise to $7 billion from $1 billion.
B&N’s growth won’t come from just sales of e-books, however, but from gains across the digital spectrum. It anticipates that in fiscal 2012 it will sell $1.8 billion in Nook devices and content (e-books, magazines, apps and PubIt! services) compared to $880 million in fiscal 2011. It put its share of the digital newsstand business at about 30%, and Lynch reiterated what he said in September that PubIt! is B&N’s fastest-growing digital business.
He also once again stressed the importance of using Nook displays in its stores as a competitive advantage in selling digital devices and content as well as its 35,000 booksellers. With Borders gone, Lynch noted is the only national bookstore chain remaining for developers, leading to favorable deals. Lynch also repeated B&N’s strategy of expanding in the educational toys and games business. 
For its part, Libery laid out some of the reasons it made its $204 million investment in B&N earlier this year during the investor meeting. It too cited B&N as being the only national bookseller that operates profitable stores with short-term leases and with a good chance to profit from the liquidation of Borders. The physical stores will drive sales of digital goods, Libery said, and noted that it believes B&N is "cracking the code of e-book service, e-reader and low-end tablet market."
* From PW Daily

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