The Glade 4.0

Two weeks ago Barnes & Noble Inc. BKS -5.58% scratched its big ambitions to become a player in the tablet hardware business. On Monday, the retailer's CEO was out the door.


Two weeks ago Barnes & Noble scratched its big ambitions to become a player in the tablet hardware business. On Monday, the retailer's CEO William Lynch was out the door. Tom Gara reports. Photo: AP.


Barnes and Noble's CEO has stepped down amid Nook losses. Will this story end like a fairy tale or in heartbreak? Miriam Gottfried joins MoneyBeat. Photo: AP.

William Lynch resigned as chief executive, effective immediately, in the wake of last month's news that losses at the bookseller's Nook digital business had more than doubled for the quarter ended April 27.

Mr. Lynch had been named chief executive in March 2010, having previously run the company's website. He focused his energies on the emerging digital books business and building a family of dedicated Nook digital devices, including color tablets.

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One More Casualty Of Nook Problems: Its CEO
Although Barnes & Noble has succeeded in selling e-books, it struggled in the hardware business. The retailer was never able to gain traction in the critical tablet market, where it competed with much larger technology companies such as Apple Inc., AAPL -0.44% Amazon.com Inc., AMZN +0.02% Google Inc. GOOG -0.15% and Samsung Electronics Co. Barnes & Noble recently said it would stop making its own color tablets and instead seek manufacturing partners.

In a recent discussion with analysts, Mr. Lynch conceded that Nook losses were "much higher" than expectations.

Mr. Lynch wasn't available for comment on Monday. Shares were down 4.6% in after-hours trading, indicating a market capitalization slipping below $1 billion.

Earlier

Barnes & Noble Pulls Back After Losses 6/25/13
CEO Lynch Signs New Contract 3/8/13
Barnes & Noble's Nook Falls Behind 2/28/13
The nation's largest bookseller didn't immediately name a successor. Instead, it appointed the current chief financial officer, Michael Huseby, as chief executive of Nook Media LLC and president of Barnes & Noble. Those are both new titles.

Mr. Lynch's departure comes as the beleaguered company faces an uncertain future. Earlier this year, Leonard Riggio, the retailer's chairman and largest shareholder, indicated in a filing that he was considering making a bid for the chain's consumer stores. The bookseller has since declined to provide an update.

Barnes & Noble has been looking for a buyer for its Nook Media business, which includes its digital devices, e-books, and a chain of 686 college bookstores. Mary Ellen Keating, a spokeswoman, declined to comment on the state of those efforts.

As the e-book business grew more competitive, Microsoft Corp. MSFT +0.76% in 2012 agreed to invest $605 million in Nook Media, including an equity investment of $300 million. A second outside company, Pearson PSON.LN +0.74% PLC, later invested $89.5 million.


"The question is what will Barnes & Noble do with the Nook business," said John Tinker, an analyst at the Maxim Group. "There is some value in the Nook e-books library. The real question is whether Microsoft will step up, buy the Nook business, and put their own people in charge. Barnes & Noble was too small to compete in the tablet business in a world of giants."

Allen Lindstrom, corporate controller, will succeed Mr. Huseby as the company's CFO.

In comic strips the person on the left always speaks first. - George Carlin

I would think as Tablets become more prevelant (and therefore cheaper) dedicated readers may get squeezed. (unless people really like E-ink or other innovations).