Barnes & Noble Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of book retailer Barnes & Noble (NYS: BKS) climbed 11% Tuesday after posting a narrower quarterly loss.

So what: The red ink continues to flow at Barnes & Noble, but strong sales of its Nook e-reader -- $277 million in the first quarter -- may be a sign that its digital focus is starting to pay off. The shares were crushed earlier this month after Liberty Media said it would invest $204 million in Barnes & Noble instead of buying it outright, so today's rally serves as a much-needed bounce for shareholders.

Now what: I'd continue to be cautious. Barnes & Noble still sees a full-year loss of $0.10 to $0.15 per share and doesn't expect to be profitable until roughly mid-2013. It's tough to get excited about its short-term potential. And while today's news is encouraging, betting on Barnes & Noble to beat out digital gorillas Amazon and Apple over the long run isn't exactly an enticing offer either.

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At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Amazon and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple, and the Fool owns shares of it. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool'sdisclosure policyalways gets a perfect score.

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