The stock is down 25% in early trading following the book store chain’s announcement that it may unload or spin off its Nook operation. “We see substantial value in what we’ve built with our Nook business in only two years, and we believe it’s the right time to investigate our options to unlock that value,” CEO William Lynch said. The company added that it’s talking to “strategic partners including publishers, retailers and technology companies in international markets that may lead to expansion of the Nook business abroad.” There’s no timetable for the review of the Nook business, and Barnes & Noble says that it doesn’t plan to comment on the process “unless and until a decision is made.”

Barnes & Noble says that during the nine-week holiday season total sales for the Nook line were up 70% vs the same period last year. But while demand for its new Nook Tablet was strong, sales for its Nook Simple Touch “lagged expectations, indicating a stronger customer preference for color devices.” B&N updated its earnings guidance saying that it now expects cash flow of as much as $180M in the fiscal year that ends in April — down from its forecast in December for as much as $250M. “The change in guidance is due primarily to a shortfall in the expected sales of Nook Simple Touch, as well as additional investments in growing the Nook business, such as advertising to support new products and international expansion in the back half of the year,” it says. B&N adds that its full year loss could go as high as $1.40 a share.