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Barnes & Noble founder suspends purchase plan

After announcing poor first quarter earnings, the struggling

After announcing poor first quarter earnings, the struggling Barnes & Noble bookseller's shares fell nearly 16 percent in morning trading. B&N's Nook e-reader also saw revenue down more than 20 percent. (Aug. 20, 2013) Credit: Getty Images

Barnes & Noble Inc.'s founder and largest shareholder Tuesday suspended his plan to buy the bookseller's stores, dashing investor hopes for a deal as the company again reported poor quarterly results.

B&N shares fell 12.36 percent to close at $14.61. That price was the lowest since February, when Leonard Riggio, who is also chairman, initially said he planned to make an offer for B&N's retail business.

News of Riggio's change of heart Tuesday came as the company reported a 10 percent decline in sales at its bookstores and website for the latest quarter, hurt by a drop in sales of Nook e-readers and tablets at its stores and the absence of a mega-bestseller like the "Fifty Shades of Grey" trilogy that boosted business last year.

A deal would have resulted in splitting stores off from B&N's Nook and college bookstore businesses.

Now, investors who were waiting for a deal are moving on.

"Right now, the issue is you've got a lot of short-term deal investors in the stock, and there's no deal," said Maxim Group analyst John Tinker. Investors will now focus on business fundamentals instead, he said.

And those were weak -- comparable sales fell at its college bookstore chain in the latest quarter, while the Nook unit's revenue fell 20 percent and Barnes & Noble's share of the U.S. e-books market slipped.

Despite another quarter of losses, the company said its cash position was sound and its $1-billion credit facility nearly untouched. Its stores generate a lot of cash and are still very profitable.

The largest U.S. bookstore chain said it would still entertain offers for all or part of the company, and Riggio said he reserved the right to make another bid someday, but the focus now would be on a more "integrated" company.

Riggio bought the original Barnes & Noble store in Manhattan in the 1970s and used it to launch a national chain. He holds nearly 30 percent of the company's stock.

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