Could Microsoft sweep in to buy Nook Media?

Barnes and Noble, the biggest book seller in terms of the number of retain stores, has seen better days. A few days ago, the company stated that for the fourth quarter of 2012, it recorded a net loss of $6.1 million. Part of that loss was due to its Nook tablet business, which saw its revenues fall over 26 percent to just $316 million for the quarter.

At the same time, Barnes and Noble stated in a press release that its Chairman and largest shareholder Leonard Riggio is trying to make a bid to buy the bookstore part of the business, but not the Nook Media portion. Microsoft currently owns 16.8 percent of Nook Media, which is worth at the moment about $300 million.

That has led some analysts to speculate that Microsoft could come in and buy Barnes and Noble. Barron's posted a story this weekend that stated:

B&N's current market value is $1.1 billion based on 70 million outstanding shares and it has a net cash position. Microsoft could pay $25 a share, or $1.75 billion, and gain full control of Nook plus the retail stores, which produced $371 million of pretax cash flow in the past 12 months. That price would be modest relative to Microsoft's $60 billion-plus in cash.

The author says that such a move could instantly give Microsoft over 600 retail stores all over the country and that it could launch a store-within-a-store to sell products like the Surface tablet.

Others disagree. The Motley Fool posted its own story which said:

There's no way that Microsoft could fill the cavernous Barnes & Noble stores, which also happen to be largely located in strip malls that lack the foot traffic of Apple's smaller footprint in shopping malls. If Microsoft wanted that girth, it could've picked up Borders' remnants for a pittance two years ago.

While that may turn out to be true, it's also true that Barnes and Noble's attempt to launch its own eReader and tablet lineup in the Nook to compete with Amazon's Kindle family has been met with indifference by the general public. With the exception of creating a Nook app for Windows 8 and RT devices, we have yet to see anything concrete from Microsoft in terms of its collaboration with Barnes and Noble. Microsoft might not want to buy a bookseller but it might have to either take full control of the Nook business or cash out of it while it still can.

Source: Barron's | Image via Microsoft-Barnes and Noble

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This does NOT bode well for the market. The markets are becoming smaller due to certain entities from owning everything. That isn't free market. This leads to corporate fascism. corporations controlling everything.

I think it would make sense if it was a strategic deal. If B&N sells nook to MS, Microsoft could integrate ebooks into the store (which they should also integrate music/tv too.. not just through the music hub) and possibly in return for buying up nook media get presence in B&N brick and mortars to sell WIndows 8 tablets/readers..

Hmm that raises an interesting concept... What if the Windows 8 store became more than just an app store and became a full fledged competitor to the itunes store? With a store selling music, movies, apps, and books all built into every single Windows 8 machine.....

Perfect evolution to come in Windows Blue or Windows 9...

It wont happen. Barnes and Nobles was one of the hold outs to paying a patent to Microsoft for their use of Android and wanted to take the case to court. Microsoft decided instead of risking it in court would just buy a % of the nook tablet business and let B&N run it into the ground; holding enough % that B&N couldn't go off the rails and do whatever they want.

The goal has been reached - B&N will pull out of the hardware business and MS has one less competitor in the tablet space. I don't see any reason MS would buy the nook hardware business.

If the riggio brothers want to buy Barnes and noble, but not nook, and Microsoft wants an eBook platform, why in gods name would they buy Barnes and noble, but not nook? Does anyone who writes or reviews the articles use any common sense?

greenwizard88 said,
If the riggio brothers want to buy Barnes and noble, but not nook, and Microsoft wants an eBook platform, why in gods name would they buy Barnes and noble, but not nook? Does anyone who writes or reviews the articles use any common sense?

They are using common sense. Any new buyer would either have to pay Microsoft their 300 million + extra back or keep Microsoft on as a 16.8% partner that would have significant say on how the hardware + software evolves; and the first part would assume MS would be even willing to sell the % back to any new buyer - which I doubt they are. MS basically has the ability to control the nook hardware with significant say and keep a competitor out of the tablet space.

The nook business was rolled off as a separate company for a reason; so MS and B&N could have a partnership in the hardware side - it also allows B&N to sell off the bookstore business as it appears they are doing without tying it to the hardware side. B&N probably realized the deal they were getting into but had little choice due to their financial situation.

pgn said,

They are using common sense. Any new buyer would either have to pay Microsoft their 300 million + extra back or keep Microsoft on as a 16.8% partner that would have significant say on how the hardware + software evolves; and the first part would assume MS would be even willing to sell the % back to any new buyer - which I doubt they are. MS basically has the ability to control the nook hardware with significant say and keep a competitor out of the tablet space.

The nook business was rolled off as a separate company for a reason; so MS and B&N could have a partnership in the hardware side - it also allows B&N to sell off the bookstore business as it appears they are doing without tying it to the hardware side. B&N probably realized the deal they were getting into but had little choice due to their financial situation.

The Riggio brothers were the owners of Barnes and Noble before it went public. Now that its public, they're trying to take it private again - like Dell. They're also trying to get rid of the nook business. I can't see a single reason for Microsoft to want to get into the book selling business, take over bookstores, and NOT buy the Nook brand that they need.

I prefer B&N to Amazon and I think more people than ever seem to be reading books. But Amazon just has a better built-in store to handle ebooks, etc. B&N needs to do something really fantastic or their goose is cooked.

No. Their stores are in the worst locations, and Microsoft already has video and music distribution systems in place, if they really wanted to add eBooks to that, I think it would be quite trivial for them.

My mom reads the ebooks... she loves it. My brother reads a book once a while. I read the articles on the sites such as technology based sites..

If you're excluding e-books from that statement, well that's just technology complementing our current standard. If you're including e-books, then it would go a long way to explain the mass stupidity growing more prevalent every day.

ZipZapRap said,
If you're excluding e-books from that statement, well that's just technology complementing our current standard. If you're including e-books, then it would go a long way to explain the mass stupidity growing more prevalent every day.

I think it's more of the latter... LOL