Barnes & Noble is starting to have second thoughts about the Nook. 
 
 After sales of the e-reader and tablet line fell 34% in the company's fiscal fourth quarter, which ended in April, Barnes & Noble (BKS) executives said Tuesday that it's time for a change in strategy. 
 
 The bookseller will stay the course on its e-reader business, but Barnes & Noble plans to pursue a partnership to help it make Nook HD tablets. The company will continue to sell Nook tablets in stores, but future devices might be co-branded with the new manufacturer's name as well as the Barnes & Noble logo. 
 
 "We are 100% not exiting the device business," insisted William Lynch, CEO of Barnes & Noble, on a conference call Tuesday. 
 
 Lynch did not name the company that Barnes & Noble will partner with, but he said that more information on device strategy would be released in coming months. 
 
 The news comes on the heels of an industry rumor that Microsoft (MSFT) is considering the purchase of the Nook brand. The software giant already invested in the Nook business, taking a 17.6% stake in April 2012. 
 
 Microsoft declined to comment about its future plans for the Nook. 
 
 The bookseller's stock fell by about 18% after the earnings report was released Tuesday morning. 
 
 Barnes & Noble said the Nook HD has simply become too costly to produce, despite the fact that its has successfully reduced overhead costs in recent months. The company spent $26 million less on the Nook when compared to the previous fourth quarter. 
 
 The bookseller said it will continue to build its digital catalog and add thousands of e-books every week. Its digital sales decreased by almost 9% for the fourth quarter, but Barnes & Noble noted that the decline is party due to drop in device sales and also because popular novels, such as The Hunger Games and Fifty Shades of Grey trilogies, were best-sellers a year ago. 
 
 Overall, Barnes & Noble reported a fourth quarter net loss of $118.6 million, nearly double its loss from a year ago. Revenue fell by 7.4% to $1.3 billion. 
 
 Consistent with prior years, Lynch expects the company to open five new stores in the coming year while closing between 15 and 20 stores. ||||| Article Excerpt 
 
 After spending hundreds of millions of dollars in an effort to compete with Amazon.com Inc. and Apple Inc. in the market for tablets and e-readers, Barnes & Noble Inc. is beating a retreat. 
 
 The bookseller said Tuesday that losses at its Nook digital business more than doubled in the quarter ended April 27, easily wiping out profits generated at its bookstores. As a result, Barnes & Noble said it would stop producing its own color tablets, in favor of co-branded devices made by third-party manufacturers. 
 
 Barnes & Noble will continue to design and make its own black-and-white Nook e-readers, which ...
– Barnes & Noble appears to be admitting defeat when it comes to competing with Apple, Amazon, and Samsung in the tablet market. The company announced today that it will no longer be making its own color Nook tablets, following big losses for Nook in the fourth quarter. However, the bookseller will still manufacture its black and white Nook e-readers, and will sell co-branded color tablets made by other companies, the Wall Street Journal reports. Not only did Nook revenue decline 34%, but declining Nook sales also hurt the retail store results for the quarter. The decision to pull back from the tablet market leads to questions about where the bookseller is headed; CEO William Lynch has been focused on technology for the past three years, as the print book market continues to struggle. But, CNNMoney reports, Lynch insisted today, "We are 100% not exiting the device business."