Shares of Barnes & Noble Inc. (NYSE: BKS) tumbled nearly 12% on Friday following the announcement that the U.S. Securities and Exchange Commission (SEC) was launching an investigation into the company’s accounting practices. The SEC’s review includes B&N’s restatement of its 2011 and 2012 results.

In addition to reviewing the restated results, the SEC will also review allegations from a former employee of the company that certain charges booked to the bookstore business should have been booked to the company’s digital business. That business, which centers on B&N’s Nook e-reader and its sales of e-books.

About the only thing propping up B&N’s share price at all is a possible spin-off or sale of the company’s digital division. While Amazon.com (NASDAQ: AMZN) followed the natural path from a Kindle e-reader to a more versatile Kindle Fire tablet, B&N stuck with its e-reader-only plan both because it didn’t have the cash to do the development work and because the company probably honestly believed that it could follow the razor-and-razor-blade model by offering an inexpensive e-reader and then selling e-books by the armload.

Needless to say that didn’t happen. B&N is not Apple Inc. (NASDAQ: AAPL) and had no chance to build an Apple-like ecosystem that would bind Nook buyers tightly to B&N’s digital books. So the company is stuck with a product it can’t afford to extend and that will only be bought by another company at a fire-sale price.

In its most recent quarterly report less than two weeks ago, sales in B&N’s Nook division were down 32% year over year, but the actual loss in the division was reduced by $6 million due to lower markdowns and expenses.

B&N also reported that revenues at the company’s retail bookstores and website were down 7.5% year over year in the quarter as same-store sales fell 4.9%. B&N attributed the drop to more store closing and lower online sales. In its college segment, sales fell 4.6% and same-store sales in this segment fell by 3.6%.

The consensus estimate for earnings per share this quarter is $0.66, compared with a loss of $0.18 in the same period a year ago. The consensus earnings estimate for last year’s holiday quarter was $0.54 a share. B&N will have a difficult enough time meeting its current quarter estimates without being distracted by an SEC investigation.

Given B&N’s weakness the fact that the stock fell 12% on Friday is actually not such bad news. The shares closed at $14.43 in a 52-week range of $12.50 to $23.71.

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