US bookseller Barnes & Noble said Thursday it will retain its struggling Nook division, which produces tablets and digital books, backtracking on a decision from last year.
The company said it would instead spin off its education unit, which sells books on college and university campuses.
The spinoff of the education unit is set to be completed by August, a statement said.
"Separating Barnes & Noble Education will create an industry-leading, pure-play public company with more flexibility to pursue strategic opportunities in the growing educational services markets," chief executive Michael Huseby said.
"At the same time, Barnes & Noble will be able to better capitalize on improving industry trends and merchandising initiatives within its core retail business.
"Retail and the Nook digital business will be able to leverage a more integrated technology infrastructure for improved efficiency and to better serve digital customers."
Nook was developed to help the struggling bookseller compete in digital content against the likes of Amazon and Apple, but has failed to gain traction in the marketplace.
Microsoft last year ended its ties with the Nook division, which has also moved to make cobranded tablets with South Korean electronics giant Samsung.
B&N said it posted a profit of $12.3 million on revenues of $1.7 billion in the most recent quarter, with the Nook division seeing an operating loss of $38 million.