Barnes & Noble may spin off Nook

Barnes & Noble is considering spinning off its Nook e-reader business, CEO William Lynch said today.

"We see substantial value in what we've built with our Nook business in only two years," Lynch said in a prepared statement, according to the Wall Street Journal. "We believe it's the right time to investigate our options to unlock that value."

Also, keeping Nook in the company is proving costly, CNN reported. Barnes & Noble said it’s now forecasting 2012 losses of at least $1.10 per share, more than the 63 cents per share analysts had previously expected. It also downgraded its 2012 sales forecast to $7.1 billion, lower than analysts' forecast of $7.3 billion, according to CNN.

The company said its losses stem from lower-than-expected sales of its $99 black-and-white e-reader, the Nook Simple Touch and from needing additional resources to expand the Nook business, CNN reported.

According to the Wall Street Journal:

Barnes & Noble's statements suggest the book chain is struggling to compete with Amazon.com Inc. in the e-book business. Analysts said that while the Nook family of e-readers and tablets are impressive, intense spending is needed to keep up in the competitive market, especially from Amazon's Kindle devices and Apple Inc.'s iPad.

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Lynch told the Financial Times that splitting up makes sense since the two businesses are so different. “One is a very stable, very mature business that is growing – our physical book sales grew – which we believe is undervalued,” he said. “And there is this high-growth, high-flying digital business that we think is valuable, which is consuming more investment.”

If the company does proceed to separate its stores and Nook, the two companies would continue to have a “symbiotic-type relationship,” Lynch told analysts, according to the Financial Times.