Can the Nook Compete in the Tablet Wars?
There’s room in the tablet market for more than just one device, Barnes & Noble CEO William Lynch told CNBC’s “Squawk on the Street” on Monday.
With much of the attention focused on the Apple iPad or Amazon Kindle, the CEO said“this notion that there’s going to be one winner in tablets is not correct.”
Barnes & Noble’s Nook is going after the reader and family segments, Lynch said and unlike Amazon, the company has partnered with Target and Wal-Mart to expand its distribution reach beyond the Barnes & Noble stores.
The Nook is also able to compete on price, with the basic Nook HD selling for $199. “We’re aggressively pricing out of the gate,” Lynch said, adding that depending on what competitors do, they’re willing to compete on price since Nook uses are heavy purchasers of online content.
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Barnes & Noble has created a separate subsidiary for its digital and college businesses called Nook Media, with Microsoft making a $300 million investment for a 17.6 percent equity stake.
The investment values Nook Media at $1.7 billion. But Barnes & Noble’s overall market cap is just $825 million.
Lynch was unable to explain the disconnect. “By any measure, the company is undervalued right now,” Lynch said, given the expected “explosive” growth forecast for its digital business and a still growing retail business.