Barnes & Noble Exploring Options for Nook Business

Barnes & Noble said Thursday it is reviewing its options for its Nook e-book and e-book catalog business and might separate it from its core bookstore business.

The company also lowered its yearly guidance. The news sent shares down 30 percent in morning trading.

The review marks a shift in Barnes & Noble's strategy of investing heavily in electronic books and its Nook e-book readers as it faces face tough competition from online retailers and discount stores.

In an interview with the Associated Press, CEO William Lynch said the move is an effort to provide more visibility into Nook operations, which Barnes & Noble doesn't believe are valued as highly as they should be by investors and analysts.

"We want to unlock value and shine a bright light on that business," he said.

He said the company is looking at a "range of options" for the Nook business, which the company expects to generate $1.5 billion in revenue in fiscal 2012. He declined to comment on whether the company was considering selling the business outright.

Lynch added that the company is also looking at expanding the Nook business overseas and should make an announcement related to that within the next two months.

Analysts expressed skepticism.

"Separating Nook from the Barnes & Noble brand would be a huge mistake," said Simba Information senior trade analyst Michael Norris. "A lot of people who buy e-books buy physical books as well. Do they really want to tamper with that kind of marriage?"

The company, which released its Nook Tablet in November, also says it overestimated demand for its black-and-white Nook Simple Touch reader during the holidays. Still, combined sales of Nook products rose 70 percent compared with a year ago.

Overall, during the nine-week holiday period Barnes & Noble says sales in stores open at least one year rose 3.4 percent. Digital content sales more than doubled compared with a year ago.

Barnes & Noble cut its yearly guidance of earnings before interest, taxes, depreciation and amortization, a financial measure known as Ebitda, to between $150 million to $180 million. In December it said that figure would be at the low end of the range of $210 million to $250 million.

Shares fell $3.80, or 28 percent, to $9.75 in morning trading.