Barnes & Noble Inc. is the latest old-school company to discover how costly it can be to try to reinvent itself for a digital future.
The nation’s largest bookstore chain warned Thursday it would lose twice as much money this fiscal year as it previously expected, and said it is weighing splitting off its growing Nook digital-book business from its aging bookstores.
Over the past 15 years, rapid technological change has transformed the company from a dominant retailing force that left smaller booksellers quaking in fear to a struggling giant grasping for a plan to ensure its long-term relevance to the publishing industry.
Barnes & Noble realized early on that e-books could appeal to consumers, but allowed Amazon.com Inc. to get an early leg up. Now it is locked in a battle with Amazon and another deep-pocketed rival, Apple Inc., to sell both electronic books and the high-tech devices consumers use to read them.
Digital technology continues to roil all manner of once-dominant companies. Former giants such as Blockbuster Inc., Circuit City and Barnes & Noble’s main book-chain rival, Borders Group Inc., have struggled mightily–and in some cases, disappeared altogether–in the face of digital competitors including Netflix Inc. and Amazon. Wednesday’s news that Eastman Kodak Co. was contemplating seeking Chapter 11 bankruptcy protection underscored the severity of the technology threat.
Barnes & Noble’s stock fell 17% on Thursday. The company now may be at its most critical juncture since Leonard Riggio, its chairman and largest shareholder, opened his first store in New York’s Greenwich Village in 1965.
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SOURCE: The Wall Street Journal