February 11, 2014
Nobody likes the Nook: Barnes & Noble’s stock jumps on news that it cut its entire Nook engineering division
by Alex Shephard
Yesterday morning, Business Insider reported that Barnes & Noble laid off every hardware engineer in its struggling—to put it mildly—Nook division. According to Jay Yarow‘s report, “The engineers were let go last Thursday, according to our source. This follows Barnes & Noble dismissing the VP of Hardware, Bill Saperstein in January.”
Stocks soared—as much as 9.6%, according to Reuters—which shouldn’t come as a surprise.The Nook, which Barnes & Noble once hoped would rival the Kindle, has long been a thorn in the side of the company. Its retail and college divisions have remained profitable, but Nook revenues have consistently dropped. Last year, Barnes & Noble seemed to have absolutely no clue as to what it wanted to do with the ereader: they gave Nook owners access to the Google Play store; they thought about selling it to Microsoft; they practically gave them away (over and over again). None of it worked: Nook sales dropped 20.2% last year and an astonishing 60.5% over the holiday season.
Barnes & Noble quickly pushed back at the report, however. While it “conceded there were some job cuts,” according to Reuters, it denied that it had shuttered the whole division. Mary Ellen Keating, Barnes & Noble’s spokesperson, this statement to Business Insider:
“We’ve been very clear about our focus on rationalizing the Nook business and positioning it for future success and value creation. As we’ve aligned NOOK’s cost structure with business realities, staffing levels in certain areas of our organization have changed, leading to some job eliminations.”
This businesspeak is more or less in line with the statements the company has made about the flailing tablet over the past several months. “Future success and value creation” are well and good (wait a second, that doesn’t mean anything), but investors are clearly getting antsy. Last year, in a surprising moment of candor, B&N boardmember (and part owner) Gregory Maffei told investors, “No one’s happy with the Nook.” Based on the rise in the company’s stock prices yesterday, that seems to be true.
Alex Shephard is the director of digital media for Melville House, and a former bookseller.