Chief Leaves Barnes & Noble After Losses on E-Readers

William Lynch Jr., the chief executive of Barnes & Noble, resigned on Monday, two weeks after a devastating earnings report that accentuated the bookseller’s losing battle against powerful rivals like Amazon.

Mr. Lynch’s departure was part of a series of sweeping changes the company announced as it tries to regain its footing after a failed initiative to build up its Nook division and compete in the increasingly crowded market for e-readers. When it revealed its fourth-quarter earnings late last month, Barnes & Noble said it would cease making its own color tablets, an acknowledgment that they were lagging popular brands like Amazon’s Kindle Fire and Apple’s iPad.

Instead, the company said it would form partnerships with third parties to make the color devices, while it continued to make and sell its own black-and-white versions of the Nook.

In a statement late Monday, the company said that Michael P. Huseby had been appointed chief executive of the Nook division and president of Barnes & Noble. Mr. Huseby has served as chief financial officer since joining Barnes & Noble in March 2012; previously he held that position at Cablevision Systems, a media company.

Max J. Roberts, the chief executive of the college division, will report to Mr. Huseby, while Mr. Huseby and Mitchell S. Klipper, the chief executive for the retail stores, will report to Leonard Riggio, the company’s chairman.

The moves on Monday appeared to be a step toward separating the digital and retail divisions, as the company has indicated it might do. Barnes & Noble has been in talks over a potential sale of its digital assets, as well as its 675 bookstores.

Microsoft is one potential buyer of the Nook business; last year it invested hundreds of millions of dollars to acquire 17.6 percent of the division.

Mr. Riggio has expressed interest in taking back ownership of the physical stores that make Barnes & Noble the largest bookstore chain in the country. Mary Ellen Keating, a spokeswoman for Barnes & Noble, declined to provide an update on that offer.

There was no indication that a new chief executive would be named.

“Because the company is in a transition period, we have no immediate plans to name a C.E.O.,” Ms. Keating said.  

 “We thank William Lynch for helping transform Barnes & Noble into a leading digital content provider and for leading in the development of our award-winning line of Nook products,” Mr. Riggio said in a statement issued Monday. “As the bookselling industry continues to undergo significant transformation, we believe that Michael, Mitchell and Max are the right executives to lead us into the future.”

The financial results for the fiscal fourth quarter underscored the urgency of the need to take action. The Nook unit showed a $177 million loss in earnings before interest, taxes, depreciation and amortization, or Ebitda, more than doubling the loss from the period a year earlier. Sales fell 34 percent, to $108 million.

The signs have been ominous for the company since the beginning of the year, when it announced that sales for the nine-week holiday period in late 2012 had declined at both its bookstores and in the Nook unit.

Mr. Lynch joined Barnes & Noble in February 2009, with no previous experience in bookselling. He was executive vice president for marketing at HSN.com and also worked for Gifts.com.

At the time, his arrival was hailed as a forward-thinking move, since Mr. Lynch, a Texas native, was only 39 years old and fluent in e-commerce and technology. Within months, Barnes & Noble introduced its first Nook e-reader.

To publishers, Mr. Lynch had performed a temporary miracle, helping create a product that provided a welcome competitor to Amazon’s Kindle, which dominated the market and offered e-books at a relatively inexpensive price.

The Nook was initially successful, drawing critical praise and capturing consumers who were uneasy about buying an e-reader — at the time a brand-new device — online, without testing it out in person. Barnes & Noble’s hundreds of retail stores allowed potential customers to see and touch what they were buying.

But even though Barnes & Noble quickly gained a sizable piece of the e-book market, it was not enough to ward off Amazon. And as black-and-white e-readers gave way to multifunctional color tablets, Barnes & Noble found itself competing unsuccessfully against companies many times its size, like Amazon and Apple, that have had technology in their DNA from the start.

As chief executive, Mr. Lynch worked from the company’s Ninth Avenue office in Manhattan, across town from the Fifth Avenue building where Mr. Riggio keeps his office. Mr. Lynch threw his energies into the digital side of the business, taking far less of an interest in the retail stores, and frequently flew to Palo Alto to build up Barnes & Noble’s presence in Silicon Valley, where their e-readers are designed.

Mike Shatzkin, the founder and chief executive of the Idea Logical Company, a publishing consultant, said a split of the business could help stave off the company’s decline.

“The Nook business clearly is going to need some global investment to have any kind of chance at all, and it certainly looks possible that they will be better off separate than together,” Mr. Shatzkin said. “There’s a glide path to oblivion, and you can affect the speed of the decline. Nobody’s going to bring back a robust brick-and-mortar book business.”

Tesla’s Elon Musk Leaves Zuckerberg’s Fwd.us

The advocacy group, Fwd.us, is spearheaded by Facebook’s co-founder and chief executive, Mark Zuckerberg, and counts many tech industry executives among its supporters. To drum up political support for overhauling immigration law, the group has bankrolled ads for lawmakers who support the Keystone XL oil pipeline, a lightning-rod issue for environmentalists.

A spokeswoman for Mr. Musk’s second company, SpaceX, a rocket manufacturer, confirmed that he was no longer involved with Fwd.us, but declined to elaborate. The news was first reported Friday evening by Reuters.

The Reuters report said that David Sacks, chief executive of Yammer, a social networking company, had also withdrawn support. His office did not return calls seeking comment. But Kate Hansen, a spokeswoman for Fwd.us, said the group still has many backers.

“We recognize that not everyone will always agree with or be pleased by our strategy – and we’re grateful for the continued support of our dedicated founders and major contributors,” she said. "FWD.us remains totally committed to supporting a bipartisan policy agenda that will boost the knowledge economy, including comprehensive immigration reform.”

Fwd.us has been criticized by some environmental groups, though its backers have defended its “innovative tactics” as part of a broader strategy to rewrite immigration law. Fwd.us said it spent in “the seven figures” for three television spots that support senators who play a prominent role in the progress of the immigration bill.

One advertisement supports a plan for border enforcement by Marco Rubio, a Republican. Another supports Lindsey Graham, a Republican who like Mr. Rubio is part of the Gang of Eight that drafted the immigration bill. A third television ad is for Mark Begich, a Democrat from Alaska, where conservative voters are critical of legislation that offers relief to those who immigrate illegally to this country.

The advertisements prompted strong reaction from a coalition of liberal organizations that includes the Sierra Club, the League of Conservation Voters and MoveOn.org. They announced earlier this week that they would suspend buying advertisements on Facebook, which they acknowledged would have little economic impact on the company.

Fwd.us includes people like John Doerr, a venture capitalist who invests in clean technology firms, and Reid Hoffman, an entrepreneur who founded the electronic payment company PayPal with Mr. Musk and Mr. Sacks.

The group has declined to say who gave how much money to the cause, except to list major donors. By Friday afternoon, neither Mr. Musk nor Mr. Sacks were on the roster of contributors.

Deal Professor: Flawed Bidding Process Leaves Dell at a Loss

Harry Campbell

The private equity firm Blackstone Group has exited the stage for Dell, abruptly bringing down the curtain on a budding takeover contest. It has the elements of a farce, and Dell’s board has no one to blame but itself.

The fizzled bidding for Dell is a result of the board’s extreme reliance on a process known as a go-shop and how it ran the initial sale. If this episode does not change the way companies sell themselves, perhaps it should.

A go-shop is a device that companies started using about a decade ago. The go-shop typically provides that after a deal is announced, the target company shops like Paris Hilton, as a Delaware judge once put it, looking to see if another bidder is willing to compete.

Why would the first bidder allow this?

The answer lies in its origins. Go-shops were first used in private equity buyouts. The private equity firm would often team with management to make a bid, demanding exclusive negotiations. Boards would agree to this exclusivity but in exchange demand a period of time when alternative bids could be solicited. This way they could be assured that the company was being sold for the highest possible price.

Yet there is also plenty of skepticism about this process. The conventional wisdom is that go-shops are a hollow ritual. The feel-good perception that the company is being actively shopped covers up the fact that the initial bidder has a perhaps unbeatable head start. Once a deal is announced, others don’t have time to catch up, nor do they want to get in a bidding war. A go-shop becomes just a cover-up for a pre-chosen deal.

There is truth to this. At least one study has found that go-shops don’t generally attract higher-valued bids when management and private equity firms are involved. This makes sense. After all, if the original bidding group has management locked up, how is a subsequent bidder going to run the company?

Despite such concerns, the Dell board used both exclusivity and a go-shop in structuring the sale process, although it did add some frills to try to protect shareholders further.

Instead of running an open auction contest at the very beginning, the Dell board negotiated with the private equity firms Silver Lake Partners and Kohlberg Kravis Roberts & Company. When K.K.R. dropped out, the board asked TPG to join the process.

But the board focused on only two bidders at a time and didn’t reach out to others. Instead, when Blackstone called about a deal in January, it was left to bid only in the go-shop after it was announced that Michael S. Dell and Silver Lake were offering $13.65 a share to take Dell private.

It is curious that the Dell board adopted the go-shop process so wholeheartedly. Even in the best of circumstances, they are seldom successful. Since 2004 there have been 196 transactions with go-shops in them, according to the research provider FactSet MergerMetrics. In only 6.6 percent of these did another bidder compete during the go-shop period. More than 93 percent of deals with go-shops do not attract competing bids.

You can slot Dell into the overwhelming majority. The Dell board hired Evercore to run the go-shop, and the investment bank contacted 71 parties. Now Dell appears left with only Carl C. Icahn.

It might have turned out differently, if the board had pulled Blackstone fully into the sale process before the announcement of an agreement to sell the company to Silver Lake and Mr. Dell. By failing to include Blackstone — with its growing technology practice that includes a former executive of Dell — from the get-go, it allowed the go-shop process to unfold in the harsh glare of the media.

And when your business is something like a melting ice cube, time matters. A recent International Data Corporation report showed the PC business in a free fall, with United States shipments down 12.7 percent in the first quarter of this year compared with the previous year, and Dell falling behind its competitors. The deterioration in the business was one of the reasons Blackstone decided not to bid.

Hindsight is 20-20, of course. Still, Dell’s board should have known that how it ran the sale would come under harsh scrutiny. Dell’s biggest shareholder outside of Mr. Dell, Southeastern Asset Management, had told the Dell board before the proposed buyout was announced that it would not support a transaction where it could not roll over its shares and that was not in the range of $14 to $15 a share, according to a securities filing. That Southeastern is now heavily protesting this deal is no surprise.

People close to Dell vigorously defend the sale process, calling the go-shop a “success” since it brought Blackstone even this close to bidding.

But Dell’s use of the go-shop now leaves its shareholders with a hollow choice. Silver Lake and Mr. Dell will most likely wait it out, possibly raising their offer a quarter or two at the last minute to win over shareholder holdouts. They certainly have no incentive to do anything before then or to do much more, if even that. And then shareholders will be forced to vote between this deal and taking the risk with a still publicly traded company that Blackstone has now so publicly spurned. It’s really not much of a choice.

Moreover, there will now be furious lobbying by Southeastern and Mr. Icahn to have equity stakes in a newly private Dell rather than take the buyout offer. Southeastern wants to salvage its investment in Dell — its cost basis in the stock is above the current offer price. But it appears the fund has little leverage unless it can persuade these now doubly cowed public shareholders to play a game of chicken with Mr. Dell.

At this point, it is simply speculation whether there could have been a healthy bidding war for Dell. Yet there are lessons here for companies that use go-shops in the future.

The risk that the process leaves shareholders with no real choice is particularly keen when management is involved. Dell’s board went admirably out of its way to secure the cooperation of Mr. Dell with any winning bidder, but even then it appears that he was not so willing to cooperate with Blackstone, as Andrew Ross Sorkin of The New York Times noted in his column.

Running a full auction of a company beforehand when there is leverage to fully secure management’s cooperation appears to be the better course.

In other words, the next time a company says that the price being paid to shareholders will be a good one because they have a go-shop, be wary. And as for directors, when executives from a private equity firm with $51 billion in assets under management comes knocking on your door, you might not want to turn them away.

Disposal of Older Monitors Leaves a Hazardous Trail

The crumbling cardboard boxes, stacked in teetering rows, 9 feet high and 14 feet deep, were so sprawling that the inspectors needed cellphones to keep track of each other. The layer of broken glass on the floor and the lead-laden dust in the air was so thick that the inspectors soon left over safety concerns. Weeks later, the owner of the recycling company disappeared, abandoning the waste, and leaving behind a toxic hazard and a costly cleanup for the state and the warehouse’s owner.

As recently as a few years ago, broken monitors and televisions like those piled in the warehouse were being recycled profitably. The big, glassy funnels inside these machines — known as cathode ray tubes, or CRTs — were melted down and turned into new ones.

But flat-screen technology has made those monitors and televisions obsolete, decimating the demand for the recycled tube glass used in them and creating what industry experts call a “glass tsunami” as stockpiles of the useless material accumulate across the country.

The predicament has highlighted how small changes in the marketplace can suddenly transform a product into a liability and demonstrates the difficulties that federal and state environmental regulators face in keeping up with these rapid shifts.

“Lots of smaller recyclers are in over their heads, and the risk that they might abandon their stockpiles is very real,” said Jason Linnell of the Electronics Recycling Coordination Clearinghouse, an organization that represents state environmental regulators, electronics manufacturers and recyclers. In February, the group sent a letter to the Environmental Protection Agency asking for immediate help dealing with the rapidly growing stockpiles of the glass, much of which contains lead.

With so few buyers of the leaded glass from the old monitors and televisions, recyclers have collected payments from states and electronics companies to get rid of the old machines. A small number of recyclers have developed new technology for cleaning the lead from the tube glass, but the bulk of this waste is being stored, sent to landfills or smelters, or disposed of in other ways that experts say are environmentally destructive.

In 2004, recyclers were paid more than $200 a ton to provide glass from these monitors for use in new cathode ray tubes. The same companies now have to pay more than $200 a ton to get anyone to take the glass off their hands.

So instead of recycling the waste, many recyclers have been storing millions of the monitors in warehouses, according to industry officials and experts. The practice is sometimes illegal since there are federal limits on how long a company can house the tubes, which are environmentally dangerous. Each one can include up to eight pounds of lead.

The scrap metal industry estimates that the amount of electronic waste has more than doubled in the past five years.

A little over a decade ago, there were at least 12 plants in the United States and 13 more worldwide that were taking these old televisions and monitors and using the cathode ray tube glass to produce new tubes. But now, there are only two plants in India doing this work.

In 2009, after television broadcasters turned off their analog signals nationwide in favor of digital, millions of people threw away their old televisions and replaced them with sleeker flat-screen models. Since then, thousands of pounds of old televisions and other electronic waste have been surreptitiously unloaded at landfills in Nevada and Ohio and on roadsides in California and Maine.

Most experts say that the larger solution to the growing electronic waste problem is for technology companies to design products that last longer, use fewer toxic components and are more easily recycled. Much of the industry, however, seems to be heading in the opposite direction.

Cathode ray tubes have been largely replaced by flat panels that use fluorescent lights with highly toxic mercury in them, said Jim Puckett, director of Basel Action Network, an environmental advocacy group. Used panel screens from LCD televisions and monitors, for example, do not have much recycling value, so many recyclers are sending them to landfills.

Apple iOS 6 Leaves Out Google’s Mapping Data

On Wednesday, Apple released a software update for the iPhone that, among other changes, replaces the Google maps that have been on the phone since 2007 with Apple’s own maps. So far the feedback from reviewers and early adopters of the new software is that it is attractive but suffers from holes and glitches.

For example, some have found that searches for an in-town destination can pull up an entirely different city, and there is no built-in information about public transportation.

Apple’s previous versions of iOS, its mobile software system, included a Maps app that was made by Apple but powered by Google’s mapping service. In iOS 6, the latest version, Apple has replaced the old app with a new version that uses mapping data collected or purchased by Apple itself.

The company has been preparing for this change for a while as Google, with its Android software for phones, has come to be more of a competitor than a partner. Over the last three years, Apple has acquired three mapping companies.

On the bright side, the new Apple-powered Maps app includes some features that were not in the old version, like spoken turn-by-turn directions and Flyover, a feature that shows 3-D models of buildings in major cities.

The colors in the Apple maps sparkle a bit more; zooming and panning is faster. Yelp, a popular review site for businesses and restaurants, supplies data for location searches. And iPhone users can ask Siri, the voice-powered assistant, to tell them how to get somewhere.

But because Apple is relatively new to mapping, it has a lot more work to do before its service is as robust as Google’s.

Anil Dash, a New York-based entrepreneur, was critical of Apple and its maps on his blog, writing that Apple had “used their platform dominance to privilege their own app over a competitor’s offering, even though it’s a worse experience for users.” He complained that a search for “Bloomberg” failed to turn up the company’s headquarters, and one for an address on Lexington Avenue pulled up a street in Brooklyn, even when “NY, NY” was specified.

Trenton Fuller, an iPhone and iPad owner and a computer systems administrator in Louisville, Ky., said he liked the look of the Apple maps but found similar problems.

Mr. Fuller said he did a search for Heine Brothers, a popular coffee shop in Louisville, but substituted “Bros.” The map service could not find the shop until he typed its name in precisely. Google Maps, in contrast, was able to find it, even with spelling variations. And the Apple service came up with an inaccurate street address for Mr. Fuller’s office.

“Not being able to find businesses or points of interest without spelling a name 100 percent perfectly could cause some grief,” Mr. Fuller said. “That problem combined with inaccurate street addresses could be superfrustrating.”

Despite the problems, Mr. Fuller said he did not regret his decision to order the new iPhone 5, which will come with the new software installed when it is released on Friday.

For public transit schedules, Apple gives the option for customers to tap on a tab inside the Maps app and download a third-party transit app for their city, though the quality of these may vary.

Google could build its own maps app for Apple devices and submit it to Apple for approval. It declined to say whether it would do so. Brian McClendon, vice president for engineering for maps at Google, would say only that the company wanted to make its maps available to everyone.

All iPhone users will continue to be able to reach Google’s mapping service through a mobile Web browser, a method that is somewhat clunky compared with an app. (The Google site prompts users to create a Google Maps icon that resides alongside app icons on the iPhone.) Users who choose not to upgrade to the new Apple operating system or buy a new iPhone will be able to keep using Google’s maps, and there is no indication that either Google or Apple will stop providing that service.

As more people use Apple’s maps, the company will learn how to improve them. There are 400 million devices running iOS, so it may only be a small matter of time before millions of people have the new maps. Over the next year or two, Apple’s maps should become as good as Google’s for most people, said Scott Rafer, chief executive of Lumatic, a company that has developed a transit app for iPhones.

“What no one’s talking about is map usage is a lot more important than any of this crazy software” that Google’s maps may have, Mr. Rafer said.

Google executives, though they will not talk directly about Apple’s maps, are reminding people that Google is coming to the fight with years of expertise, and a lot of data of its own.

Google, which has offered maps since 2005, has taken photos of streets in 3,000 cities for its Street View service, photos that help it ensure the accuracy of its maps. And it has information about one million transit stops around the world, including things like photos of the inside of Tokyo subway stations and directions on which exit to use.

“It takes a long time and effort to figure out how to do this right,” Mr. McClendon said. “Experience is important.”

On the same day that Apple released iOS 6, Google introduced some small updates to its Android maps, like the ability to see a list of places that a user had previously searched for on his computer.

Michael Gartenberg, an analyst at Gartner, said Apple was clearly not the market leader in maps, lagging both Google and Nokia. But Mr. Gartenberg said he did not think most consumers would be bothered by what was missing in Apple’s maps and that, on the whole, they would be more pleased by the addition of turn-by-turn navigation.

“The granularity of how good mapping is on one platform versus another doesn’t seem like it’s going to matter a lot to consumers,” he said.

Claire Cain Miller contributed reporting.

Cloud Leaves Some Tech Giants Seeking a Silver Lining

On June 11, Apple showed its next operating system for iPhones and iPads. It offered maps and speech recognition, plus music and movies on iTunes, all tied via the Internet to Apple’s “cloud” of servers.

A week later, Microsoft, known better for software, demonstrated the Surface tablet, its answer to the iPad. The Surface interacts with both the Web and Microsoft’s cloud, called Windows Azure. And, last Wednesday, Google introduced its newest cloud-connected phone and tablet, as well as a media player called Nexus Q. The player works with the devices, the Internet and the Google cloud.

Remarkably fast, a multibillion-dollar industry is moving away from personal computers made mostly with Microsoft Windows software and Intel semiconductor chips. The combined revenue from these largely so-called Wintel desktops and laptops last year was about $70 billion at Dell and Hewlett-Packard. But these companies played virtually no part in the June shows from Apple, Microsoft and Google.

Asked what part it hoped to play in the cloud-dominated future, Dell declined to comment. An H.P. spokesman said in a statement that his company had computer servers and software in “eight of 10 of the world’s most trafficked sites, four out of five of the world’s largest search engines, the three most popular social media properties in the U.S.” He said nothing about PCs.

The tech future also poses challenges for Intel, which has been diversifying. Its chips are now in Apple computers and a host of other devices. Intel still has a significant place in the market, but often with lower-margin chips, and increased competition. Another chip company, Nvidia, got a shout from Google’s stage.

We are seeing a new business ecosystem with all sorts of mobile and cloud-connected devices. Each is a powerful computer, with connections to a nearly infinite amount of data storage and processing in the cloud.

“We’re entering this era where consumer electronics is the hardware, and the software and the cloud,” said Matt Hershenson, Google’s hardware director. His view increasingly holds for business computing, too.

Coincidentally, Friday was the fifth anniversary of the iPhone’s introduction. Next week, cloud-based software applications for the iPhone from outside developers will have their fourth anniversary. And, already, cloud devices that Google called experimental last year are now almost mainstream.

People now use their iPhones and tablets in their jobs. More than five million businesses write documents and swap spreadsheets in Google’s cloud-based applications. Microsoft, with arguably the most at risk in this transition, has 273 business and finance applications for sale in its cloud store, Azure Marketplace.

In the new ecosystem, many rules are still being worked out. Amazon, with its Kindle tablet and a successful online computing cloud and software store, may yet be a significant player. So may Barnes & Noble, which has a decent tablet and apps in the Nook reader but lacks a big cloud data center.

A few things are already clear. Power now centers on controlling millions of computers tied together in the cloud, with a complementary marketplace where people can find, sell and manage applications. Few physical stores sell software anymore, but sales channels still matter. Even the iPhone did not really take off until it had apps, sold through Apple’s store.

Those apps were written mostly by outside software developers. Developers have been important to the industry for decades. If you keep thousands of them happy with decent software-making tools and a big potential audience, as Microsoft learned, they will build products that make you essential. When the PC came along, these were games like Flight Simulator and productivity software like Lotus; now we have Angry Birds and modifications of Google Apps.

In the Wintel world, new versions of Microsoft Windows came out every few years, with major software projects tied to desktops and laptops. By contrast, in less than five years Apple has announced six versions of its mobile operating system. Google’s operating system for cloud-connected laptops, called Chrome, is updated every six weeks. The June meetings were intended to get developers working on consumer products that would be out by Christmas.

“Urgency has a whole new meaning now; you can’t slip,” said Andy Peterson, a senior software engineer at L4 Mobile, which makes mobile applications for companies like Sony and MTV. He was one of 5,500 developers at Google’s I/O conference last week. “I started at the company last September,” he said, “and I’m on my fourth application.”

Still, he says, the pace and the ability to get a creation into so many hands is exciting.

Dell and H.P. might not be joyful, but should they be glum? With so many devices, the consistent experience may be guided by centrally managed cloud software, but hardware is where the experience lives. That is why Steve Jobs was so long adamant that Apple control both hardware and software, and why even now Apple is picky about which independently produced apps are allowed in its store.

Microsoft apparently showed off the Surface without much notice to longtime hardware partners but could now bring them in to build it. Google’s strongest outside relationship with a hardware maker seems to be with Samsung. Google’s new tablet was made by Asustek of Taiwan.

Google says it is open to working with the incumbents — but these companies have to completely reimagine themselves, centering on using their esoteric knowledge of how business uses technology, rather than how to make a cheaper PC.

“What H.P. and Dell can do is understand the needs of the enterprise,” said Sundar Pichai, senior vice president for Chrome at Google. “They can say, ‘Here is our tablet, we have phones, here is how it will work across your company.’ We don’t have a sales force that can do that.”

That may mean giving up on the consumer market, more or less. But it beats being a relic of the old world.