Barnes & Noble Earnings Preview

Concerns over market share losses will likely be the focus on next week’s earnings call. Barnes & Noble is scheduled to report their fiscal fourth quarter 2010 results after the market closes on Monday, June 28.


Analysts have been speculating for weeks that the launch of Apple’s [[AAPL]] iPad could result in significant market share losses for other e-readers. Barnes & Noble [[BKS]] seemed to confirm that fear yesterday when they cut the price of their Nook e-reader to $199. Amazon [[AMZN]] quickly followed by lowering the price of its Kindle e-reader to $189 from $259. Today Apple announced that they have now sold 3 million iPads.


Last quarter, Barnes & Noble reported earnings results that were $.04 above Wall Street’s consensus estimates. BKS shares plunged 6.0% after the book retailer gave disappointing guidance for the rest of the year.


The current Wall Street consensus estimates are for revenues of $1.28 billion and EPS of ($.81). This would imply a 16% increase in revenues over last year’s $1.11 billion. However, losses are Barnes & Noble are expected to increase from last year’s ($.04) per share.


In 2010, Barnes & Noble’s shares have fallen 15% and have underperformed the flat performance of the S&P 500 index. Last year, BKS shares gained 27% and just outperformed the 24% gain in the Nasdaq.


Barnes & Noble stock is currently trading at 20x consensus 2012 EPS estimates. If a reduced Nook price point fails to stem market share losses, BKS shares look set to tumble further in 2010.


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