Published in AI

Barnes & Noble buys Microsoft’s stake in Nook

by on05 December 2014



Spin off ready

Troubled bookseller Barnes & Noble has bought Microsoft’s stake in Nook as part of a cunning plan to spin off its loss-making e-reader and digital content division. Barnes & Noble shares closed down 5.4 percent on the New York Stock Exchange after the company also reported a much-weaker-than-expected quarterly profit, due to lower sales of Nook devices. The company estimated the value of the cash and share deal at about $125 million.

Nook, launched in 2009, enjoyed initial success but has ended up costing Barnes & Noble a fortune as it was unable to keep pace with Amazon’s Kindle. Microsoft invested $300 million in Barnes & Noble's Nook e-reader in 2012 to gain a foothold in the fast-growing e-books market but it proved to be a poisoned chalice.

Barnes & Noble said in June it would spin off its Nook Media business, which includes college bookstores, to focus on its retail book business. Microsoft will lose money on its initial investment, but will also be spared any future payments to fund Nook, which were running at about $21 million per quarter.

Under the agreement announced on Thursday, Microsoft will have the right to receive about 22.7 percent of total proceeds of Nook's digital business, which excludes the college bookstores, if it is sold in the next three years.

Rate this item
(0 votes)

Read more about: