Barnes & Noble CEO Lynch Out After Nook Woes Deepen

Another dreary chapter for Barnes & Noble came to a close today with the resignation of chief executive William Lynch, the man brought on board to build the company's tablet business.

At the same time that Barnes & Noble announced Lynch's depature, founder and chairman Leonard Riggio said the company was reviewing its strategy and made a series of moves in the top ranks, though he did not name a replacement for Lynch. The executive running the retail business, Max Roberts, will report directly to Riggio, as will Michael Huseby, the current chief financial officer. Huseby will now oversee Barnes & Noble's digital education business and Nook unit.

Officially, Barnes & Noble offered no explanation for Lynch's departure. It's not difficult to read between the lines, though. Lynch, a one-time Palm executive, was unable to push Barnes & Noble into the tablet business, a market heavily dominated by Apple 's iPad, and to a far lesser extent, Amazon.com 's Kindle. That's despite Lynch's best efforts. He choose to work from the company Website's offices rather than its corporate headquarters, and at times he would take a page from Apple's playbook, personally introducing new products himself. But yet Barnes & Noble said a month ago it would stop making the color Nook, the latest, if unsurprising, signal that Barnes & Noble couldn't manage to compete with Apple or Amazon.com--Nook sales had already fallen 34% in the previous quarter. And now Lynch's ousting after just three years further underscores the company's growing frustration with the Nook business.

Along with the struggling Nook, Barnes & Noble also expects declining sales to continue at its book-stores--and it must weigh Riggio's offer to purchase the retail business. Riggio is the company's largest shareholder, controlling 3o% or so. Riggio, in effect, further consolidated his power by removing Lynch and making the top lieutenants report directly to him.

Shares of Barnes & Noble fell 4.9% to $16.80 in after-hours trading.

Amazon.com had already badly hurt the traditional book-selling business, once dominated by Barnes & Noble and Borders, by selling lower priced items online and offering quick and efficient shipping options. Borders already succumbed to the pressure, closing its doors in 2011.

Barnes & Noble, meanwhile, is awash in red ink. The company lost $475 million on the Nook business in the most recent fiscal year, and resorted several times to price cuts on the tablets to stay competitive.

Reach Abram Brown at abrown@forbes.com.