Book seller Barnes & Noble Inc.’s (NYSE:BKS) stock leaped almost 5 % in early trading on Tuesday after the company reported lower-than-expected first-quarter loss thanks to strong sales generated from its digital content segment. The company also posted better-than-expected revenue.
BKS also revealed that it expects to forge an alliance with software giant Microsoft Corp. (NASDAQ:MSFT) by this fall. The two companies are expected to form a new subsidiary; and, according to the deal Microsoft will invest $300 million in the new subsidiary which will house the Nook and college businesses.
For the quarter, BKS reported a loss of $41 million, or 78 cents a share, compared to a loss of $56.6 million, or 99 cents a share, in the year earlier quarter.
Analysts’ consensus estimate was at a loss of 98 cents a share.
Meanwhile, revenue climbed by 2.5% to $1.5 billion, beating analysts’ forecast for of $1.48 billion.
The growth in revenue can be attributed to a 46% leap in digital content sales and 4.6% rise in its (bookstore) same-store-sales.
Nevertheless, on the downside Nook sales, which consist of e-readers, digital content and accessories segments, remained flat at$192 million owing to lower average selling prices. Besides, sales were also affected by some production issues related to company’s Glowlight product.
The company said that (college) same-store-sales also fell 2% compared to the year earlier quarter.