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Stifel downgrades Barnes & Noble on increased competition in e-books
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The new Nook Tablet is seen during a demonstration at the Union Square Barnes & Noble in New York, November 7, 2011.
Credit: Reuters/Shannon Stapleton
Wed Aug 15, 2012 11:55am EDT
(Reuters) - Brokerage Stifel Nicolaus downgraded top U.S. bookstore chain Barnes & Noble Inc to "hold" from "buy," as it expects competition in the e-book category to heat up with several big companies launching products.
Shares of Barnes & Noble were down more than 5 percent at $12.55 on Wednesday morning on the New York Stock Exchange.
The bookseller, which has bet its future on staking a claim in the e-books industry, has poured hundreds of millions of dollars in developing the Nook digital books and e-readers.
But keeping Nook competitive is expensive: the Nook business lost $77 million on revenue of $163.6 million in the fourth quarter.
Stifel does not expect customers to switch platforms but sees competition heating up as players including Google Inc, Apple Inc and Amazon.com Inc launch tablets and applications.
"We believe consumers are relatively set in their e-book platforms - so we don't expect as much movement as noise - but there is and will be increasing competitive noise in e-books," analyst David Schick wrote in a note.
The brokerage noted that Google's Nexus 7 tablet with Google Play, Apple's impending launch of the iPad mini and Amazon's recent launch of the Prime Video Player app for iPad will likely create headlines.
Barnes & Noble Inc cut prices on three models of its Nook e-reader and tablet devices on Sunday, ahead of the peak of the back to school season and amid speculation that rival Amazon.com is preparing to launch a new version of its Kindle Fire tablet.
Barnes & Noble in June reported lower-than-expected quarterly revenue on disappointing sales of its Nook devices and said it expects sales at its stores to fall this fiscal year.
(Reporting by Ranjita Ganesan; Editing by Supriya Kurane)
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