Posted on 04/30/2012 10:19:20 AM PDT by SeekAndFind
Microsoft will invest $300 million in Barnes & Noble's Nook e-reader, gaining a foothold in the fast-growing e-books market as the bookseller gets more firepower to compete against Amazon.com's Kindle and Apple's (AAPL) iPad.
The move comes as Microsoft is looking to generate excitement around its tablet-friendly Windows 8 operating system, expected on the market around October. The deal announced on Monday includes Microsoft taking a stake in the bookseller's college bookstore division. It also means that the two companies have settled their patent dispute.
Shares of Barnes & Noble soared nearly 70 percent on Monday, while Microsoft shares were nearly flat. The agreement values the Nook and textbook businesses, which will form a new subsidiary, at $1.7 billion.
"This is not a financial investment. It's a strategic investment to strengthen Windows 8 as a platform for tablets and e-reading," said BGC Partners analyst Colin Gillis.
Barnes & Noble gets a much-needed capital injection and a way to enter the digital books market outside the United States.
Microsoft will receive a 17.6 percent stake in the new company, temporarily called Newco. It will be run by Barnes & Noble and will maintain a relationship with the U.S. bookstore chain's nearly 700 stores.
Barnes & Noble's Nook has found a strong following, allowing it to garner some 27 percent of the U.S. e-books market in the 2-1/2 years since the device was launched. But battling Amazon's market-leading Kindle has proved expensive.
"It gives them a much larger partner with deeper pockets, it gives them increased reach," said Morningstar analyst Peter Wahlstrom. "In the last two years they've had their backs against the wall."
(Excerpt) Read more at mercurynews.com ...
MSFT Market cap: $268.95B. AAPL: $546.06B. Yes, Microsoft has more outstanding shares, but the total value of Apple's shares is more than double that of Microsoft.
Five years ago the Nook would’ve been pretty cool. But anymore... The Kindle is just eating their lunch.
I agree. My Father has a Nook. Not bad, but my K3 and my bride’s Fire are much better.
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