Barnes & Noble to Sell Shares of Its Online Unit

NEW YORK — Barnes & Noble Inc., the nation’s largest book retailer, said Thursday that it will sell shares in its online unit to the public, seeking to raise cash as other companies rush to sell books on the Internet and investors flock to online stocks.

Barnes & Noble plans to sell as much as 20% of barnesandnoble.com, the No. 2 online bookseller behind industry pioneer Amazon.com Inc.

Analysts estimate the initial public offering could raise as much as $100 million. Barnes & Noble could use the new cash to build up its World Wide Web business as rivals Amazon.com and Borders Group Inc. expand their Internet sites. Moreover, competition is going to get even fiercer: Bertelsmann, the world’s biggest English-language publisher, plans to start selling books online soon.

Shares of Seattle-based Amazon are valued at $6.44 billion, more than the combined $4.82 billion for Barnes & Noble and Borders--even though Amazon.com has not made money and its sales are just a 12th of those of the leading traditional booksellers.

Barnes & Noble is the first traditional retailer to offer a stake in its Internet business. The company is hoping the offering will prompt investors to place a higher value on its stock.

Amazon’s shares have surged almost tenfold in the last year on optimism that it has established a clear lead in online book sales; Barnes & Noble shares are up 70% in that period.

Barnes & Noble Chairman and Chief Executive Leonard Riggio is hoping to have the same success on the Internet that he has had in turning its B. Dalton, Doubleday and Barnes & Noble stores into the biggest and most influential traditional booksellers in the U.S.

However, the company is not expected to make money on its online site until at least 2000, as spending on marketing and developing the site exceeds sales.

The Barnes & Noble Web site generated sales of about $14 million last year, compared with $147.8 million for Amazon.com. For the fiscal second quarter ended Aug. 1, barnesandnoble.com had sales of $12.5 million, up fivefold from the period a year earlier. Even so, the unit lost $13.6 million, or 20 cents a share.

Barnes & Noble said it will file a registration statement for the offering in the next 30 days.

The company also said Thursday that its fiscal second-quarter loss widened to $5.71 million, or 8 cents a share, from $1.4 million, or 2 cents, a year earlier. That matches the average estimate of analysts polled by First Call Corp. Revenue rose 9.3% to $675 million.

Barnes & Noble shares rose $2.81 to close at $40.06 Thursday on the New York Stock Exchange.