September 13, 2013

At shareholder meeting, Barnes & Noble states the obvious: “Look, no one’s happy with the Nook.”


Barnes & Noble chairman Len Riggio got a bit testy with investors–and talked about his love for the company–at the company’s annual shareholder meeting.

On Tuesday, as Apple unveiled its “wonderfully mundane” new iPhone, Barnes & Noble held its annual shareholders meeting. No new products were announced. No one liveblogged the event from a broken Nook. Elvis Costello did not appear.

Instead, Barnes & Noble’s founder and chair, Len Riggio answered questions from investors about the company’s disastrous summer and the Nook’s disastrous, well, everything.

First, the good news — and there is good news, as we’ve noted in the past:

The massively unprofitable Nook has been an ereader-sized thorn in the side of Barnes & Noble for quite a while now and, unsurprisingly, it appears to have been the focal point of the meeting. Per a Publishers Weekly‘s dispatch:

Both B&N CFO Allen Lindstrom and B&N and Nook Media CEO Michael Huseby recapped B&N and Nook Media’s quarterly losses—once again blaming “overly optimistic” projections of past Nook holiday sales—and again emphasized that B&N had to grow its content sales and better integrate the retail stores and Nook digital strategy. Riggio noted that “our losses are coming down,” and pointed out that “our biggest competitor has regularly reported losses for the last 10 years.” Huseby emphasized that “we’re not going to cut our way to profitability. Retail and digital work together and we have to stop these declines quickly and grow content sales. If we don’t, we’ll look at alternatives. We’ve got to grow content sales and there will be no sale or split off of B&N and Nook.”

When asked why Nook was not sold to Microsoft, as was rumored earlier this spring, Riggio said, “Everything is on the table; we’re looking at all the doors. How we proceed depends on what we encounter. Some of you tell me you want a dividend, or a special dividend; others say sell one of the companies or others say split up the company. There are a lot of possibilities and not all mesh.” And later, when asked why he hadn’t bought Barnes & Noble’s retail division, as some had hoped, a visibly frustrated Riggio responded in a similar fashion: “I’m not obliged to talk about personal decisions… One side is demanding I buy retail, others say I’m stealing retail. So I don’t know where to go from there.”

Still, Riggio’s frustration was tempered by something that’s been increasingly clear over the past decade: his devotion to bookselling. “I love this company and this business so it’s not all about money,” he emphasized. “It’s more personal. I don’t want to buy retail and I don’t have to say why.”

On one hand, Riggio’s comments don’t make me feel particularly optimistic about the future of Barnes & Noble — though he was clearly pressed and somewhat frustrated, it’s evident that the company is lacking in vision at the moment and “We’re looking at all the doors,” is not particularly heartening, especially in a moment of crisis. Obviously not all of the possibilities mesh, but the company apparently doesn’t yet have a strategy for getting itself out of the digital hole it’s been stuck in for quite a while. Of course, there’s still plenty of time, but the clock is ticking: its shareholders are frustrated, and one wonders if they’ll tolerate another summer like this one — or a holiday season like 2012’s, for that matter.

And yet, Riggio clearly believes very strongly in the business of bookselling — I don’t doubt for a second that it is, as he says, “personal” and “not all about money.” Barnes & Noble was the Amazon of the 90s, so Riggio was, to indie bookstore-lovers and many others, the big bad wolf of that decade (though he was great in that Meg Ryan movie). But, over the past decade a fuller — and, one suspects, more complete — picture of the man has emerged. He’s clearly rooting for the stores to succeed and not just to save the company — I don’t expect Barnes & Noble’s investors to make the best decision for the company as a bookseller, but I do expect Riggio to. (That said, I suppose it’s easy to love the house cat that pisses everywhere once the tiger shows up.)

Expecting a coherent strategy (or even the hint of one) may be too much right now. It’s clear that Barnes & Noble is between a rock and a hard place, as it lacks Amazon’s greatest competitive advantage: it has to make a profit, while Amazon not only doesn’t, it may not ever have to. Gregory Maffei, CEO of Liberty Media, who owns 17& of B&N, said as much Tuesday: “Look, no one is happy with Nook, we know we need a new ereader strategy, but it’s not easy when you look at [the competitors] we’re up against. It’s not like Liberty Media is against split-offs but it would be difficult to do at this time.”


Alex Shephard is the director of digital media for Melville House, and a former bookseller.