Barnes & Noble: Ramping Up Production of the Nook Isn't Cheap

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Barnes & Noble (NYSE:BKS) said Tuesday that it will invest heavily on boosting production of its nook e-reader and that move will hurt future earnings.

Barnes & Noble cut its outlook for the fiscal year ending April 30, 2010. The bookseller said that retail traffic “will remain challenged during the holiday season.” But we knew that already. The big reason for Barnes & Noble’s new outlook is investment in the nook, which is sold out.

In a statement, Barnes & Noble said:

The company is ramping up its production schedule, incurring higher production costs than originally anticipated and increasing future investments related to its digital strategy, including additional people, technology and in-store marketing support.

How much higher are these costs? Enough to result in a serious earnings hair cut for fiscal 2010. The company now expects fiscal year earnings to be 33 cents a share to 63 cents a share, down from a previous forecast of 59 cents a share to 89 cents a share.

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