Barnes & Noble e-book, app sales up 46% despite Nook device declines

Barnes & Noble reported fiscal first quarter 2013 revenues of $1.45 billion, up 2.5 percent year-over-year, thanks in part to increased sales of e-books, applications and related digital content optimized for its Nook tablet and e-reader platform.

First quarter consolidated earnings before interest, taxes, depreciation and amortization was $4 million, compared to a loss of $24 million a year ago, Barnes & Noble said. Although Nook business revenues remained virtually flat year-over-year at $192 million, digital content sales increased 46 percent, offsetting declining device sales blamed on lower average selling prices and production scaling issues that translated to unmet customer demand for the new Glowlight product. Nook EBITDA increased from a year-ago loss of $51 million to a loss of $57 million as a result of price adjustments, as well as continued investments in the Nook business.

Barnes & Noble is expected to introduce a new version of its Android-powered Nook Tablet in time for the 2012 holiday shopping season. On Monday, the company said it will expand the Nook business to the U.K. market later this year.

In April 2012, Microsoft (NASDAQ:MSFT) invested $300 million into a new Barnes & Noble subsidiary dedicated to advancing the bookseller's digital content strategy. The unit, tentatively named Newco, merges Barnes & Noble's digital and college businesses; the bookseller owns approximately 82.4 percent of Newco, which will operate in association with the company's retail stores, and Microsoft owns the remaining 17.6 percent. Barnes & Noble updated the status of the deal as part of its earnings announcement, stating it remains "actively engaged" in Newco's formation and continues implementing the work necessary to complete the Microsoft transaction. Barnes & Noble said it expects the Microsoft transaction to close sometime this fall.

Microsoft previously stated it will integrate the Nook digital bookstore into its Windows 8 operating system, also expected to roll out during the fall season.

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