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UPDATE 1-Barnes & Noble posts quarterly profit, plans new Nook device

(Adds details on new Nook product)

Feb 26 (Reuters) - Barnes & Noble Inc returned to profitability during the holiday quarter after it scaled back its money-losing Nook tablets business and its core bookselling business stabilized.

Shares of the company, the largest U.S. bookstore chain, were up 2.6 percent at $18.19 in premarket trading.

The profit came despite a 10.3 percent decline in overall revenue. The company last year said it would only produce new tablets with a partner after it had lost hundreds of millions of dollars in recent years from trying to compete with the likes of Amazon.com Inc, Apple Inc and Google Inc .

Barnes & Noble has repeatedly said it is not abandoning its Nook business, whose sales fell 50.4 percent in the third quarter ended Jan. 25.

The company did not introduce any new tablets ahead of the holiday season, and it lowered Nook prices to sell off extra inventory.

But the company plans to introduce a new Nook color device sometime after April, saying it is "actively" engaged with several hardware companies.

The Nook business had been draining the company's resources: Barnes & Noble had $490 million in cash at the end of the quarter, up from $276 million a year earlier as it stopped making new devices and cut staffing levels.

Overall revenue fell 10.3 percent to $2 billion in the quarter. Sales at stores open at least 15 months dipped 0.5 percent, excluding Nook products such as e-readers, as book sales stabilized.

The company posted a net profit of $63.2 million, or 86 cents a share, compared with a year-earlier loss of $3.7 million, or 14 cents a share.

Barnes & Noble's profit got a lift from its college bookstores, where growth in the higher-margin textbook rental business more than offset a drop in revenue.

(Reporting by Phil Wahba in New York; Editing by Lisa Von Ahn)

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