Contrary to popular belief, battered and bruised retailer Barnes & Noble is not exiting the tablet business — at least not yet.
In a earnings call for the fiscal third quarter of 2014 on Wednesday, the company revealed it had cut roughly 26% of its Nook workforce and admitted it had not shipped a new tablet throughout 2013. The company, however, is already hard at work on a new "color tablet" that could ship "in early fiscal 2015" — meaning late May or early June of this year. Barnes & Noble offered no further details on platform, size or screen technology.
See also: Barnes & Noble: When Great Isn’t Good Enough
The company's last digital product, a new ultra-light Nook Glowlight, shipped last October to little fanfare and virtually no marketing. Barnes & Noble's last two full-blown Android tablets, the well-received Nook HD and Nook HD+, shipped way back in 2012.
Since then, the company has replaced its CEO and worked to offload future hardware development to a third-party company. Despite the introduction of a new e-reader, the lack of new tablet hardware led to a 50.4% decrease in Nook sales in Q3 and a 26.5% tumble in digital sales.
So what did Barnes & Noble did sell last quarter? The company said it essentially burned through existing Nook inventories, and to meet increased holiday demand, also built some additional product out of "previously acquired parts and components."
Despite the device drought, Barnes & Noble's CEO Mike Huseby told investors that the company still thinks "reading devices are important in terms of driving content revenue, because that’s where the margins exist.” Profit margins on hardware simply aren't that good.
A particularly bright spot for Barnes & Noble last quarter was its physical book sales. The company reported "improving bookstore sales trends," adding that customers are reigniting their love affairs with physical books — perhaps a good sign for the company. E-book sales, at an industry level, were flat in 2013.
Although the company cut 190 digital jobs since the spring of 2013, Barnes & Noble still maintains a 500-person Nook business, though Huseby said they continue to examine the possibility of separating its retail and digital into two separate businesses. In the meantime, the company expects to expand its existing relationship with its unnamed third-party hardware partner.
Huseby also addressed last week's bid by private equity firm G Asset Management for a 51% controlling stake in the company, stating that G Asset apparently has just one employee (founder Michael Glickstein), extremely limited financial resources and lacks the equity to support his proposal. "It's not a proposal worthy of further action or discussion," Huseby said.
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