Investing

Nook, Windows 8 Pairing Doubles B&N Stock Price

courtesy Barnes & Noble Inc.
Microsoft Corp. (NASDAQ: MSFT) and Barnes & Noble Inc. (NYSE: BKS) announced this morning that the two companies were forming a “strategic partnership,” called ‘Newco’ for purposes of the announcement, that would be a subsidiary of B&N and “will build upon the history of strong innovation in digital reading technologies from both companies. The partnership will accelerate the transition to e-reading, which is revolutionizing the way people consume, create, share and enjoy digital content.”

What B&N has done, essentially, is establish a value for its Nook business and gained a deep-pocketed partner to attack the tablet/e-reader market now dominated by the iPad from Apple Inc. (NASDAQ: AAPL) and the Kindle family of products from Amazon.com Inc. (NASDAQ: AMZN).

B&N’s Nook reader has been a mild success, but the company needs the bigger footprint it gets with the Microsoft partnership. Like Amazon’s Kindle Fire, the Nook uses its own version of Google Inc.’s (NASDAQ: GOOG) Android operating system.

Microsoft is investing $300 million in ‘Newco’ in exchange for about a 17.6% equity stake, placing a value of about $1.7 billion on the new subsidiary. The company will include B&N’s digital business, including its Nook e-reader, and the company’s College division. Microsoft’s coming Windows 8 operating system will include a Nook application.

Microsoft’s investment is pretty small, given the company’s $60 billion cash hoard. But it now has put a stake in the ground to let everyone know it plans to compete in the tablet market. And at some point, B&N will need more cash, which will only come from a spin-off or a sale of the new company. Guess who will be first in line?

Shares of B&N have nearly doubled in the pre-market this morning, to $26.87, a new 52-week high if it holds above the current range of $9.35-$18.73.

Paul Ausick

Are You Ahead, or Behind on Retirement? (sponsor)

If you’re one of the over 4 Million Americans  set to retire this year, you may want to pay attention.

Finding a financial advisor who puts your interest first can be the difference between a rich retirement and barely getting by, and today it’s easier than ever. SmartAsset’s free tool matches you with up to three fiduciary financial advisors that serve your area in minutes. Each advisor has been carefully vetted, and must act in your best interests. Start your search now.

Don’t waste another minute; get started right here and help your retirement dreams become a retirement reality.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.

AI Portfolio

Discover Our Top AI Stocks

Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.

You can follow him investing $500,000 of his own money on our top AI stocks for free.