FILE - In this Aug. 29, 2011 file photo, a Barnes &Noble store front is displayed, in Portland, Ore. Barnes & Noble says its fiscal third-quarter loss narrowed as sales of physical and digital books rose, even as the company continues to invest it its Nook e-book readers and its digital library. (AP Photo/Rick Bowmer, File)
FILE - In this Aug. 29, 2011 file photo, a Barnes &Noble store front is displayed, in Portland, Ore. Barnes & Noble says its fiscal third-quarter loss narrowed as sales of physical and digital books rose, even as the company continues to invest it its Nook e-book readers and its digital library. (AP Photo/Rick Bowmer, File)
NEW YORK (AP) ? Barnes & Noble said Tuesday that its fiscal third-quarter net income fell 14 percent, as rising costs offset higher sales of both traditional books and digital books.
The company also said Tuesday that it is introducing a Nook Tablet device with 8 gigabytes of memory for $199. Its current 16GB device sells for $249. Barnes & Noble's biggest e-book reader competitor, Amazon.com's Kindle Fire, is also 8GB and sells for $199.
Barnes & Noble cut the price of its Nook Color device to $169 from $199. It has fewer tablet-like features than the Nook Tablet.
Revenue from its Nook e-readers and digital catalog rose 38 percent to $542 million. The figure includes the actual selling prices for e-books, rather than the commission received on selling them, and also includes all deferred e-reader device revenue.
Traditional book sales rose 4 percent. That could partly be due to the fact that it was the first holiday season it did not have to contend with competition from Borders, its chief rival that liquidated last year.
Barnes & Noble has been shifting store inventory away from books toward games and toys and other gift items. That strategy seems to be paying off.
Revenue in stores open at least one year rose 2.8 percent. The measure is a key indicator of a retailer's financial health because it excludes stores that opened or closed during the year.
"In the third quarter, our traffic and sales in stores were the highest we've seen in five years," said Barnes & Noble CEO William Lynch.
Net income for the 13 weeks ended Jan. 28 fell to $52 million, or 71 cents per share. That compares to a loss of $60.6 million or $1 per share last year. Excluding one-time times, net income totaled 99 cents per share. Analysts expected 94 cents per share.
Revenue rose 5 percent to $2.44 billion. Analysts expected revenue of $2.53 billion.
The company's cost of sales rose nearly 12 percent and its selling and administrative expenses were up about 14 percent.
Barnes & Noble reaffirmed its guidance for the full year. The bookseller expects a yearly loss of $1.40 to $1.10 per share on total sales between $7 billion and $7.2 billion. Analysts expect a loss of $1.14 per share on revenue of $7.26 billion.
Barnes & Noble shares rose 50 cents, or 3.8 percent, to $13.61 in morning trading.
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