J.T. Colby & Company, Inc. et al v. Apple, Inc.

Filing 174

DECLARATION of Todd Anten in Support re: 77 MOTION to Preclude the Testimony of Defendant's Rebuttal Expert Witness Stephen M. Nowlis., 73 MOTION to Preclude the Testimony of Defendant's Expert Witness E. Deborah Jay.. Document filed by Ipicturebooks LLC, J.Boyston & Company, J.T. Colby & Company, Inc., Publishers LLC. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H)(Chattoraj, Partha)

EXHIBIT A

Barnes & Noble Faces Steep Challenge as Holiday Nook Sales Decline - NYTimes.com

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Previous Post
January 3, 2013, 9:15 am

Barnes & Noble Faces Steep Challenge as
Holiday Nook Sales Decline
By LESLIE KAUFMAN

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Brendan McDermid/Reuters

A Barnes & Noble store in New York City. Overall sales in the nine-week holiday season for the
retailer fell 10.9 percent.

8:21 a.m. | Updated For Barnes & Noble, the digital future is not what it
used to be.
After a year spent signaling its commitment to build its business through its
Nook division, Barnes & Noble on Thursday announced disappointing holiday
sales figures, with steep declines that underscored the challenge it faces in
transforming from its traditional retail format.
Retail sales from the company’s bookstores and its Web site, BN.com,
decreased 10.9 percent from the comparable nine-week holiday period a year
earlier, to $1.2 billion, the company reported. More worrisome for the longterm future of the company, sales in the Nook unit that includes e-readers,
tablets, digital content and accessories decreased 12.6 percent over the same
period, to $311 million.
“They are not selling the devices, they are not selling books and traffic is
down,” said Mike Shatzkin, the founder and chief executive of Idea Logical, a
consultant to publishers. “I’m looking for an optimistic sign and not seeing
one. It is concerning.”

http://mediadecoder.blogs.nytimes.com/2013/01/03/barnes-noble-reports-tepid-holiday-sales/[2/5/2013 2:19:51 PM]

Barnes & Noble Faces Steep Challenge as Holiday Nook Sales Decline - NYTimes.com

The results, covering a period that ended
Dec. 29, are a sobering development for the

Digital Notes

nation’s largest bookstore chain. The
declines occurred during what is supposed to
be peak buying season. And the Nook unit’s
sagging fortunes came despite a 13 percent
increase in sales of digital content,
suggesting that it is the tepid demand for
Nook devices that is dragging down the
unit’s performance.

Julio Cortez/Associated Press

Nooks at a Barnes & Noble
distribution center. The e-reader
unit’s holiday sales fell 12.6 percent.

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Barnes & Noble has invested heavily in developing a tablet that can compete
with offerings from media giants like Google, Apple and Amazon.com. Last
April, in announcing a $300 million investment in Nook by Microsoft, the
chief executive of Barnes & Noble’s chief executive, William J. Lynch, said the
company wanted “to solidify our position as a leader in the exploding market
for digital content in the consumer and education segments.”

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A few months after that, the bookseller began breaking out the financial
DAVID CARR

results of the Nook division, In October it completed its strategic partnership
with Microsoft by creating Nook Media, a subsidiary and a signal that it was
ready to ride its digital business into the future.
But while Barnes & Noble’s most recent Nooks have won critical praise, they
have failed to gain significant traction with consumers.

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Though the company’s stock was down only slightly — falling 2 percent to
$14.22 — the reaction in the financial world was unsparing. Analysts stopped
short of saying that this was a do-or-die moment for the Nook Media
division, but they acknowledged that options for a strong digital future were
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Other companies do not break out sales of their digital tablets, but Amazon
has been saying sales of its Kindle Fire were strong. Analysts say Apple’s iPads
also appear to be doing well.
“The problem is not whether or not the Nook is good,” said James L.
McQuivey, a media analyst for Forrester Research. “What matters is whether
you are locked into a Kindle library or an iTunes library or a Nook library. In
the end, who holds the content that you value?”
For an increasing number of consumers, he said, the answer is not Barnes &

In a note to clients, S&P Capital IQ said, “We think this portends greater
market share losses for the Nook over the medium term” and downgraded its
recommendation on Barnes & Noble stock from hold to sell. Barclays said in a
note that the Nook’s precipitous decline was “quite concerning” and “below
even our modest expectations.”
The declining retail numbers were also troubling when viewed in the context
of a rise in sales among independent booksellers. The American Booksellers
Association, which has not yet released official holiday sales, estimated
Thursday that its members’ sales would be up about 8 percent over last year.
VIDEO »

Barnes & Noble executives were not available Thursday to discuss the sales
numbers. But a statement from Mr. Lynch indicated that the company was
searching for a solution.
“Nook device sales got off to a good start over the Black Friday period, but

http://mediadecoder.blogs.nytimes.com/2013/01/03/barnes-noble-reports-tepid-holiday-sales/[2/5/2013 2:19:51 PM]

More Video »

Barnes & Noble Faces Steep Challenge as Holiday Nook Sales Decline - NYTimes.com

then fell short of expectations for the balance of holiday,” Mr. Lynch said.
“We are examining the root cause of the December shortfall in sales, and will
adjust our strategies accordingly going forward.”
The most intriguing, and troublesome, question is whether the company can
stay in the digital device business at all over the long run. Nook has been
expensive to develop and market and the company does not have the hefty
financial resources of its competitors.
Other options are strategic partnerships. Microsoft’s investment last spring
was seen at the time as a way to promote Nook through a powerful partner.
But sales of the Windows 8 operating system have been disappointing and the
Nook has been featured as little more than an app among hundreds on the
Windows 8 platform.
“It is going to prove to be a missed opportunity,” said Mr. McQuivey of
Forrester.
Last month, Barnes & Noble announced that Pearson, the British education
and publishing conglomerate, was taking a 5 percent stake in Nook for $89.5
million. Analysts said that cash investment was welcome and the partnership
with Pearson, a major publisher of educational textbooks, might herald a
strategy to move toward dominating an education niche market. Still, that
would be a significantly smaller business.
A version of this article appeared in print on 01/04/2013, on page B1 of the NewYork edition with
the headline: Barnes & Noble’s Strategy Is Questioned as Nook Sales Decline.

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