Barnes & Noble Inc reported a larger quarterly loss as it invested in its Nook electronic reader and e-books, and forecast a loss for its first quarter.

Chief Financial Officer Joseph Lombardi told Reuters on Monday that spending on its e-book business explains a large part of the loss in the fourth quarter.

Barnes & Noble Chief Executive William Lynch, who oversaw the development of the Nook and was named CEO in March, said in a statement that the retailer's share of the e-book market now surpasses its share of the retail book market.

A report by Goldman Sachs in April estimated that the company currently commands a 15.8 percent share of physical book sales.

We are planning to redirect a significant portion of our financial resources toward investments in technology, sales and marketing. These investments will impact our bottom line in 2011, but we believe they will enable Barnes & Noble to capitalize on the significant mid-to-long-term growth opportunities presented by the digital markets, Lynch said.

Barnes & Noble said it expects a first-quarter net loss of between 85 cents and $1.15 per share, excluding one-time items.

The company reported a net loss of $32.1 million, or 58 cents per share for it fiscal 2010 fourth quarter ended May 1, compared with a loss of $2.1 million, or 5 cents per share, a year earlier. Excluding one-time items, the bookseller lost 89 cents a share.

Overall fourth quarter sales rose 19 percent to $1.3 billion.

Sales at its namesake stores open at least one year, or same-store sales, fell 3.1 percent during its fiscal fourth quarter, ended May 1. Sales at its College Bookstore division, which represents about one-sixth of sales, rose 2.9 percent.

The New York-based retailer said Barnes and Noble.com sales increased 51 percent to $141 million during the quarter from the year ago. It said it expected it website sales to rise 75 percent to $1 billion in fiscal 2011.

SMALL UPTICK IN PHYSICAL BOOK SALES

While analysts believe the margins on the Nook, which was launched in October, are modest, they are essential to driving e-book sales, a bright spot in the publishing industry.

A price war erupted last week between Barnes & Noble and Amazon.com Inc , which makes the Kindle e-reader, as they try to stave off competition from Apple Inc's iPad, raising concerns about Barnes & Noble's prospects.

Barnes & Noble's shares, which closed at $16.41 on Monday on the New York Stock Exchange, are down 42.9 percent since they reached a 52-week high last August.

The company forecast same-store sales at its namesake stores would be flat to up 3 percent in the first quarter and for the year.

Barnes & Noble, whose major shareholders include activist investor Ronald Burkle as well the founding Riggio family, will host its annual shareholders' meeting on Tuesday, at which it said it will lay out its long-term performance outlook.

(Reporting by Phil Wahba; Editing by Steve Orlofsky and Carol Bishopric)

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