In spite of a widening first quarter loss, Barnes & Noble announced plans to keep making the color version of its Nook tablets as the company’s stock price plummeted in the wake of the collapse of an offer to acquire the company’s bookstores led by former CEO Leonard Riggio.  Less than two months ago the company made a series of announcements indicating that it was interested in exiting device side of the ebook market (see "Nook Dragging Down Barnes & Noble"), but the departure of CEO William Lynch in July (see "Barnes & Noble CEO Resigns"), has apparently deep sixed that strategy in spite of the fact that revenue from the Nook device plunged 39% in the quarter that ended July 31st.
 
Michael Huseby, who is President of Barnes & Noble and the CEO of its Nook business, took the lead on the conference call that followed the disappointing earnings report, and Huseby also took the brunt of the thinly-veiled skepticism of the questions of financial analysts, who at times appeared to be lecturing Huseby on what he needed to do to improve shareholder value.  Far from announcing any steps that might indicate that B&N was getting out of the Nook business or even seeking new manufacturing or design partners, Huseby said "Our focus going forward will be on providing customers with a more integrated Barnes & Noble and Nook experience," and then adding "And if we want to be in the content business, we need to be in the device business.'  Next Huseby rather definitely took down the notion that the company should find a third party to help with design and manufacture by saying, "No matter how they're produced, we think our people can produce better devices than anyone else."
 
Huseby noted that B&N has sold roughly ten million Nook devices, giving the company a 22% share of the ebook market, but he also admitted that losses had stemmed from bad manufacturing decisions that vastly overestimated demand for the devices over the past two holiday seasons.  B&N will have a new Nook device at retail for the coming holiday season, and plans to retool its clunky Website in 2014. 
 
The company’s loss for the quarter ending July 31st was $87 million compared with a loss of $39.8 million last year.  Revenue fell 9% from $1.45 billion last year to $1.33 billion in the most recent quarter.  Brick and mortar store revenue fell 10% to $1 billion, while the college bookstore division posted a gain of 5% to $226 million.  Nook revenue plummeted 39% to $143 million. 
 
Sales in stores that had been open for a year fell 9.1%, a drop that B&N attributes to 2013’s lack of major bookstore hits like The Hunger Games and 50 Shades of Grey, which drove sales in 2012.  In the wake of the disappointing earnings report and the collapse of former CEO Leonard Riggio’s attempt to buy the company’s brick-and-mortar stores, Barnes & Noble’s shares dropped 12.38% on Tuesday.