Barnes & Noble Inc's founder on Tuesday pulled the plug on his plan to buy the company's bookstores and the chain posted a deeper quarterly loss, sending its shares down as much as 16 percent in early trading.

The quarterly results came in slightly ahead of Wall Street expectations, but sales of B&N's Nook device and e-books plunged, and business at its stores slumped.

Leonard Riggio, the company's chairman, founder and top shareholder, said he has suspended his efforts to make an offer for B&N's retail business but reserves the right to pursue an offer in the future.

Riggio, in a statement, said he believes "it is in the company's best interests to focus on the business at hand."

Riggio bought the original Barnes & Noble store in Manhattan in the 1970s and used it to launch a national chain of big-box stores. He currently holds nearly 30 percent of the company's stock. In February, B&N said Riggio was planning to make an offer for the bookstores, a deal that would have resulted in splitting them off from the Nook device and e-book business.

Now, investors who were waiting for a deal are moving on.

"Right now, the issue is you've got a lot of short-term deal investors in the stock and there's no deal," said Maxim Group analyst John Tinker. "I wouldn't say it was a huge surprise because he first indicated interest many, many months ago, and since then, of course, the Nook business has basically been closed down. So exactly what he was buying was unclear."

Tinker suggested that at some point, B&N will likely fold the Nook back into the main business, and Microsoft Corp will figure out how much it actually wants to own. Last year, Microsoft took a 17.6 percent stake in Nook Media, and British publisher Pearson Plc bought 5 percent. B&N owns the rest.

"Certainly, for the meantime, it's more of a fundamental story rather than a deal story as they figure out what the right structure of this company is," said Tinker.

B&N put itself up for sale in 2010, but the only offer came from Liberty Interactive. Liberty backed down from an initial $1 billion bid and instead bought $204 million of B&N preferred shares convertible for $17 apiece.

THE NOOK

The latest quarter was a tumultuous one for B&N. CEO William Lynch resigned on July 8, soon after the company announced a 34 percent revenue drop in its Nook digital business, a venture he spearheaded that has cost the company hundreds of millions of dollars.

B&N said in June it would no longer make tablets unless it found a partner. It began shopping the Nook business about a year and half ago, with a view to selling it or spinning it off. It attracted investments from Microsoft and Pearson.

Earlier this month the chain slashed prices on its Simple Touch e-readers, suggesting demand in that part of the Nook business was tepid.

B&N said on Tuesday that it plans to release at least one new Nook device for the upcoming holiday season and that further products are in development.

Any Nook products face stiff competition from the likes of Apple Inc's iPad.

In an August Ipsos poll conducted for Reuters, only 2 percent of those very or somewhat interested in purchasing a tablet this holiday season said they were interested in a Nook. The most popular choice was the iPad, with 23 percent; 15 percent wanted to buy Amazon.com Inc's Kindle Fire, 13 percent said they wanted a Samsung Galaxy, and 7 percent chose an iPad mini.

QUARTERLY LOSS

B&N reported a net loss of $87 million, or $1.56 per share, for the fiscal first quarter ended July 27, compared with a loss of $39.8 million, or 76 cents per share, a year earlier.

An adjusted loss of 86 cents per share, which excludes a valuation allowance against certain deferred tax assets, was narrower than the loss of 89 cents per share expected by analysts, according to Thomson Reuters I/B/E/S.

Revenue fell 8.5 percent to $1.33 billion, slightly better than the $1.32 billion analysts had expected. Sales were much stronger a year ago, when the trilogy "The Hunger Games" and "Fifty Shades of Grey" were hot sellers.

Revenue from the Nook business, including e-books and devices, fell 20.2 percent to $153 million. At its namesake bookstores, sales at stores open at least 15 months fell 9.1 percent.

B&N said it still expects retail comparable-store sales to be down by a high single digit percentage in the current fiscal year.