When Will B&N Digital Business Turn a Profit?: Analyst

Rifkin lowered his price target on the bookseller to $8 a share from $10 a share after B&N lowered its guidance for the year and said it was considering its options for its Nook e-reader business.

"The physical side of the business is profitable," Rifkin told CNBC Friday, noting, however, that "overall profitability at the company, including the digital investments, continues to be at a loss."

B&N's CEO William Lynch, in an earlier interview on CNBC, stressed the company is profitable in both digital and physical books, and is taking its time in reviewing its options and deciding what to do next, which may include nothing at all.

Rifkin wouldn't comment on the potential Nook spin-off, but said, "I would ask investors to look at the fundamentals of the business to both the physical side as well as the ditigal side. The concern to us is only 35 days ago the revenue projection for the Nook was at $1.8 billion," but on Thursday the company lowered it to $1.5 billion. "That’s a decline of 17 percent," he said.

The Nook is a fine product, Rifkin said, but it is going up against the much larger e-reader market share of Amazon.com's Kindle. Amazon has "wreaked havoc" on other electronics companies in Rifkin's coverage universe, he said. He called Amazon a "company more focused on the top line than the bottom line, and that makes for a very dangerous competitor."

Which means B&N "might have to partner with someone to continue the investment on the Nook side of things," he said.

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Neither Alan Rifkin nor Barclays Capital own shares in Barnes & Noble. Information was not available regarding Amazon.