By Spencer Jakab 

Something you'll never see on a flashcard: 1+1=3. Business presentations are another matter, though, and the numbers just might add up this time for Barnes & Noble Inc.

The troubled bookseller said last June that it would spin off Nook Media. This is the business that hawks its eponymous e-reader. That money-losing device isn't its main attraction, though; rather, it is the college-bookstore franchise attached to it. That business is being remade into an education company that will include study-guide marketplace Flashnotes Inc., which B&N on Monday said it would invest in.

But why did B&N want to sell Nook Media's very different units together? Two reasons: The device business's losses meant it couldn't stand on its own and financial partners Microsoft Corp. and Pearson PLC had ownership in both combined.

Since that announcement, those companies have sold back their stakes to B&N. So, late last month, the company changed its plans and said it would retain Nook in its main retail unit while spinning off the education unit on its own.

Expect more details when B&N on Tuesday unveils results for its fiscal third quarter ended in January. These should show a continued improvement in profitability as Nook losses are again reduced. Analysts expect earnings per share of $1.48 compared with 86 cents a year earlier.

B&N's debt-adjusted market value is today equal to 33% of revenue. This is up from 22% before the initial spinoff plans were announced last June. That makes sense, and the unit to be spun off in August could well reward shareholders handsomely. Pure-play education peers fetch far higher multiples of revenue. The prices paid to buy out Pearson and Microsoft, which valued Nook Media at between $560 million and $680 million, certainly appear modest.

Meanwhile, the main retail unit is profitable and is the natural place for Nook to reside. B&N said "core" same-store sales, which exclude Nook, rose slightly during the holiday period. With hardware manufacturing now outsourced to Samsung Electronics Co., the company can and perhaps should keep Nook as a loss leader.

B&N got schooled when it attempted to compete with Amazon.com Inc.'s Kindle business. Its spinoff plans, which initially looked like a thinly disguised plan to close the book on Nook, now seem far more sensible.

Corrections & Amplifications

Barnes & Noble is investing in Flashnotes Inc. An earlier version of this article misstated that Barnes & Noble is buying Flashnotes.

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