Barnes & Noble Inc posted a lower holiday-quarter profit as investments to keep its Nook e-reader competitive with Amazon.com Inc's Kindle continued to hurt its results.

The No. 1 U.S. bookstore chain reported net income of $52 million, or 71 cents per share, for the quarter, which ended on January 28, compared with a profit of $60.6 million, or $1 per share, a year earlier.

Barnes & Noble cut the price on its Nook Color to $169 from $199 and introduced a Nook Tablet with 8 gigabytes of memory that will cost $199. The first version of the tablet, introduced in the autumn, was priced at $249.

Overall sales rose 5 percent to $2.44 billion, while the Nook business, including e-books and the devices, rose 38 percent to $542 million.

Barnes & Noble maintained its forecast of full year company sales of $7 billion to $7.2 billion. The Nook business is expected to generate $1.5 billion in the fiscal year ending in April.

(Reporting By Phil Wahba in New York, editing by Dave Zimmerman)

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