Microsoft Invests in Barnes & Noble

By Tayun & Alma

When Microsoft invested $600 million in Barnes & Noble’s lagging book industry, the move was very strategic.

According to The Wall Street Journal, Barnes and Noble is now working on a Nook reading app for Windows 8, which is made by Microsoft.  This will allow consumers to download reading material onto their desktops or laptops. Microsoft will make a  profit from sales of e-books and other content.

Although Nooks will be able to run on Microsoft operating systems, the contract also allows Microsoft to start to produce their own e-readers.  This is an unusual move, as Microsoft usually partners with other companies to make the hardware that their software needs to run.

Here are some more facts and figures from the article.

  • Microsoft Corporation is pledging $605 million to support Barnes & Noble Inc.’s digital book business.
  • Microsoft is taking a 17.6 percent stake in a new subsidiary that will include the e-book division and Barnes & Noble’s college bookstores.
  • Shares of Barnes & Noble surged 52 percent to $20.75 on Monday, April 30, 2012.
  • Microsoft still makes 85 percent of its annual operating income from Windows software and services and its Office software.
  • Barnes & Noble claims about 27 percent of the country’s e-book title sales today, while Amazon holds 60 percent.
  • The bookseller reported losses on its digital business; earnings before interest, taxes, depreciation, and amortization fell 42 percent to $163 million in the fiscal year ended April 30, 2011.
  • Microsoft’s $300 million investment in Barnes and Noble values the new unit at $1.7 billion; after the stock surge on April 30, it is valued at $1.25 billion.

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Categories: Economics


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