Revision Sharply Cuts Tablet Volume B&N Must Source From Samsung, Says 10-K

Barnes & Noble and Samsung signed a “revised partnership” agreement May 17 that sharply curtails the number of co-branded Galaxy-Nook tablets B&N will be obligated to source from Samsung compared with the terms of the “commercial agreement” the companies signed two years ago (see 1408210024), B&N said in a 10-K SEC filing Thursday. Under the revision, B&N “agreed to a minimum purchase commitment of devices with a total retail value equal to” $10 million during the first 12 months after the launch of any new co-branded Galaxy-Nook tablet, the 10-K said. With several different Galaxy-Nook models averaging between $100 and $400 in retail price, the $10 million commitment is sharply lower than the minimum 1 million units B&N was required to buy from Samsung in the first 12 months of launch under the 2014 agreement, the 10-K said. “The amended minimum purchase commitment replaces all prior purchase commitments” that B&N and Samsung had agreed to, the 10-K said. Samsung representatives didn't comment Friday. The revision was one of several “actions” B&N took to reduce losses in its Nook operations, the 10-K said. B&N also exited its Nook apps and video businesses, and outsourced Nook cloud management and other functions to Bahwan CyberTek, enabling it to close its offices in Santa Clara, California, and Taipei, Taiwan, the 10-K said. The Nook business incurred losses of about $65 million in the fiscal year ended April 30, B&N executives told a company Analyst Day event Thursday. Their goal is to reduce those losses to $30 million-$40 million in the fiscal year ending April 2017, they said.