Chief Leaves Barnes & Noble After Losses on E-Readers
Peter DaSilva for The New York Times
William Lynch, Barnes & Noble's chief executive, in 2012.
By JULIE BOSMAN
Published: July 8, 2013
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William Lynch Jr., the chief executive of Barnes & Noble, resigned on Monday, two weeks after a devastating earnings report that accentuated the bookseller’s losing battle against powerful rivals like Amazon.
Mr. Lynch’s departure was part of a series of sweeping changes the company announced as it tries to regain its footing after a failed initiative to build up its Nook division and compete in the increasingly crowded market for e-readers. When it revealed its fourth-quarter earnings late last month, Barnes & Noble said it would cease making its own color tablets, an acknowledgment that they were lagging popular brands like Amazon’s Kindle Fire and Apple’s iPad.
Instead, the company said it would form partnerships with third parties to make the color devices, while it continued to make and sell its own black-and-white versions of the Nook.
In a statement late Monday, the company said that Michael P. Huseby had been appointed chief executive of the Nook division and president of Barnes & Noble. Mr. Huseby has served as chief financial officer since joining Barnes & Noble in March 2012; previously he held that position at Cablevision Systems, a media company.
Max J. Roberts, the chief executive of the college division, will report to Mr. Huseby, while Mr. Huseby and Mitchell S. Klipper, the chief executive for the retail stores, will report to Leonard Riggio, the company’s chairman.
The moves on Monday appeared to be a step toward separating the digital and retail divisions, as the company has indicated it might do. Barnes & Noble has been in talks over a potential sale of its digital assets, as well as its 675 bookstores.
Microsoft is one potential buyer of the Nook business; last year it invested hundreds of millions of dollars to acquire 17.6 percent of the division.
Mr. Riggio has expressed interest in taking back ownership of the physical stores that make Barnes & Noble the largest bookstore chain in the country. Mary Ellen Keating, a spokeswoman for Barnes & Noble, declined to provide an update on that offer.
There was no indication that a new chief executive would be named.
“Because the company is in a transition period, we have no immediate plans to name a C.E.O.,” Ms. Keating said.
“We thank William Lynch for helping transform Barnes & Noble into a leading digital content provider and for leading in the development of our award-winning line of Nook products,” Mr. Riggio said in a statement issued Monday. “As the bookselling industry continues to undergo significant transformation, we believe that Michael, Mitchell and Max are the right executives to lead us into the future.”
The financial results for the fiscal fourth quarter underscored the urgency of the need to take action. The Nook unit lost $177 million before interest, taxes, depreciation and amortization, or Ebitda, more than doubling the loss from the period a year earlier. Sales fell 34 percent, to $108 million.
The signs have been ominous for the company since the beginning of the year, when it announced that sales for the nine-week holiday period in late 2012 had declined at both its bookstores and in the Nook unit.
Mr. Lynch joined Barnes & Noble in February 2009, with no previous experience in bookselling. He was executive vice president for marketing at HSN.com and also worked for Gifts.com.
At the time, his arrival was hailed as a forward-thinking move, since Mr. Lynch, a Texas native, was only 39 years old and fluent in e-commerce and technology. Within months, Barnes & Noble introduced its first Nook e-reader.
To publishers, Mr. Lynch had performed a temporary miracle, helping create a product that provided a welcome competitor to Amazon’s Kindle, which dominated the market and offered e-books at a relatively inexpensive price.
The Nook was initially successful, drawing critical praise and capturing consumers who were uneasy about buying an e-reader — at the time a brand-new device — online, without testing it out in person. Barnes & Noble’s hundreds of retail stores allowed potential customers to see and touch what they were buying.
But even though Barnes & Noble quickly gained a sizable piece of the e-book market, it was not enough to ward off Amazon. And as black-and-white e-readers gave way to multifunctional color tablets, Barnes & Noble found itself competing unsuccessfully against companies many times its size, like Amazon and Apple, that have had technology in their DNA from the start.
As chief executive, Mr. Lynch worked from the company’s Ninth Avenue office in Manhattan, across town from the Fifth Avenue building where Mr. Riggio keeps his office. Mr. Lynch threw his energies into the digital side of the business, taking far less of an interest in the retail stores, and frequently flew to Palo Alto to build up Barnes & Noble’s presence in Silicon Valley, where their e-readers are designed.
Mike Shatzkin, the founder and chief executive of the Idea Logical Company, a publishing consultant, said a split of the business could help stave off the company’s decline.
“The Nook business clearly is going to need some global investment to have any kind of chance at all, and it certainly looks possible that they will be better off separate than together,” Mr. Shatzkin said. “There’s a glide path to oblivion, and you can affect the speed of the decline. Nobody’s going to bring back a robust brick-and-mortar book business.”
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