• by Thom Forbes  @tforbes, February 26, 2013

The storyline is that William J. Lynch, Jr., the CEO Leonard Riggio brought in to develop its Nook e-book reader and, oh-by-the-way, run his chain of bookstores, never really cared for retail. So an 8-K SEC filing yesterday confirmed reports over the weekend that Riggio is putting together a proposal “to buy the struggling bookseller’s 689 stores in an effort to save them from a stormy future in the public markets,” as Michael J. de la Merced puts it in the New York Times.

Truth is, Lynch doesn’t even have an office at Barnes & Noble’s headquarters on Fifth Avenue, Jeffrey A. Trachtenberg reports in the Wall Street Journal, preferring to operate out of the dot-com offices that are three-quarters of a mile away physically and a whole lot more philosophically and operationally. In fact, Lynch told Bloomberg TV’s Nicole Lapin a few months ago that “I don’t really read physical books anymore” (although he did allow that his wife did). 

“While Mr. Riggio has often speculated to associates for years about potentially taking at least some of the company private, he appeared to become serious about buying its stores only in the last few weeks, according to a person with direct knowledge of the matter,” Trachtenberg writes.

“Riggio, who bought the original Barnes & Noble store in Manhattan in the 1970s and used it to launch a national chain of big-box stores, would primarily offer cash and assume some … debts,” the filing discloses and Reuters’ Siddharth Cavale and Phil Wahba report. “Riggio, widely believed to be a billionaire, would have little difficult pulling off a deal,” analysts tell them.

“Wall Street thinks the retail business is worthless, and Riggio thinks it’s valuable,” Maxim Group analyst John Tinker tellsUSA Today’s Roger Yu. “It’s a classic case of putting your money where your mouth is.”

Shares of Barnes & Noble rose 11.5% to $15.06 yesterday, however, suggesting that others on Wall Street are true believers, too. Yu, in fact, is among several observers who feel that bookstores have seen the worst of the impact that digital media will wreak on the retail experience. 

“I don’t think the ice cube is melting that fast in [retail],” Tinker says. “It’s more middle-age women, not young teenagers who just discovered Napster. It has Starbucks. It’s broadly an entertainment center.”

Napster? The last teens we knew using Napster are now approaching middle-age. The real question, some say, is whether a nook remains for Nook. 

The hed over Tero Kuittinen’s piece on BGR.com reads: “Did Barnes & Noble just kill off Nook?” Kuittinen writes that “this could very well be a major win for Amazon, which now can try to raid the Nook customer base while sweeping the table when it comes to new consumers considering eBook reader purchases.”

But there’s more to the Nook Media division than the Nook e-reader, including about 100 college bookstores that are profitable, Rick Newman points out on USNews.com. Barnes & Noble College operates more than 600 college bookstores on college and university campuses in 50 states, serving over 4.6 million students and more than 250,000 faculty, according to the B&N website. 

Unfortunately, executives “have yet to articulate a vision for what Nook Media is supposed to be,” Gartner analyst Allen Weiner tells Newman. “Pulling the device would hurt the momentum of the Nook Media brand.”

A free Nook app already allows shoppers to download B&N titles onto any device other than Amazon’s Kindle, Newman observes, raising “ “further questions about whether there’s a need for the Nook tablets in a marketplace that has quickly gotten crowded.”

According toBloomberg BusinessWeek’s Susan Berfield and Brad Stone, the Nook e-reader is losing the battle against better-heeled competitors such as Apple, Google and Amazon. 

“If the Nook division is spun out, as the company has long contemplated, perhaps one of the device’s deep-pocketed investors -– Microsoft -- will double down to take fuller control, shift the operating system from Android to Windows 8, and then use it to try to make further inroads into the tablet market,” they write. Such a scenario “would provide a perfect synchronicity,” they observe, “two endangered brands holding hands amid staggering odds and a market that is inexorably moving away from them.”