Barnes & Noble plans to spin off ailing Nook as a separate public company

Just when you think that Nook can’t perform any worse, it does. Now Barnes & Noble is taking steps to remedy the problem: It company wants to split its retail and Nook businesses up as two separate, publicly traded companies by the first quarter of 2015, itĀ announced in its fiscal year-end earnings report Wednesday morning. The bookseller also reported another quarter of weak earnings, with Nook revenues down 35.2 percent for the full year ended May 3, 2014.

Barnes & Noble(s BKS) shares were up around 9 percent Wednesday morning.

“We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately,” Michael P. Huseby, B&N CEO, said in a statement. “We fully expect that our retail and Nook Media businesses will continue to have long-term, successful business relationships with each other after separation.”

In addition to the digital business, Barnes & Noble’s Nook Media division also includes Barnes & Noble College stores. Nook Media was created as a Barnes & Noble subsidiary in 2012 with a $300 million strategic investment from Microsoft.

Barnes & Noble’s board authorized the company to “take steps” to separate the business, but Barnes & Noble noted that “there can be no assurances regarding the ultimate timing of the proposed separation or that such separation will be completed.”

The company’s revenues were $1.3 billion for the quarter, up 3.5 percent over this time last year, and $6.4 billion for the full year, down 6.7 percent.

The Nook business, which includes devices, accessories and digital content sales, once again performed particularly badly. Its revenues were $87 million for the quarter, down 22.3 percent over this time last year, and $506 million for the year, down 35.2 percent. Barnes & Noble specifically broke out device and accessories sales, which it doesn’t always do: They were $25 million for the quarter and $260 million for the year, down 30.1 percent and 44.8 percent, respectively. And digital content sales were $62 million for the quarter and $246 million for the year, declines of 18.7 percent and 20.6 percent respectively. Barnes & Noble attributed those losses to “lower device unit sales.”

Retail sales were roughly flat for the quarter, increasing by 0.8 percent to $956 million, and $4.3 billion for the full year, down 6 percent.

Barnes & Noble has wanted to offload Nook Media for awhile but couldn’t find a buyer. It first floated the idea of splitting Nook off as a completely separate company in 2012. We then heard a few rumors that Microsoft(s MSFT) might buy Nook Media, since after all it already had an investment in it, but that never happened. After then-CEO William Lynch departed in 2013, the company said it was still considering separating the businesses but that the time wasn’t right (read between the lines: No buyer had come forward). And B&N chairman and founder Leonard Riggio briefly considered a plan to buy up the company’s retail stores — which analysts see as the strongest part of the company — and take them private, but decidedĀ not to do so.

Barnes & Noble is no longer making tablets in-house; instead, it’s partnering with third parties on hardware. Its first such partnership is with Samsung, with a co-branded Galaxy Tab expected this fall. In an investor call following the earnings report, retail CEO Mitch Klipper said the Samsung tablets “will drive traffic to [Barnes & Noble] stores.”

This story was updated several times on Wednesday.