Shares of Barnes & Noble
How it got here
The last major retail bookselling chain is keenly aware of its need to push into digital media and has been working to transform itself in recent times. The $204 million investment it scored last year from Liberty Media
The company kicked off the new year by toying with the idea of spinning off its Nook business while also lowering its full-year guidance, sending shares down by as much as 31% to the 52-week low of $9.35 on that day.
A month later, B&N reported third-quarter earnings that mostly told the same old story: Nook and digital sales are exploding while losing money as B&N dumps the profit from no-growth retail segments into investing in the digital side.
Yesterday, B&N and Microsoft
How it stacks up
B&N's most important competitors are Amazon.com
Let's add some fundamental metrics for comparison.
Sales Growth (TTM)
Net Margin (TTM)
Source: Reuters. TTM = trailing 12 months.
Amazon and Apple are the two behemoths in the e-book industry, which go hand in hand with their tablet offerings. Barnes & Noble keeps chugging along with its own e-book initiatives, while the Nook is targeting an entirely different market than the iPad. Apple also happens to be in hot water with the feds over its disruption of e-book pricing.
The Microsoft partnership could benefit B&N by expanding its reach into Microsoft's Windows 8 platform, although this could also end up cannibalizing Nook hardware sales. The deal also settles the patent litigation between the pair, as the subsidiary will have a royalty-bearing license for Microsoft's patents.
Stay tuned for more from B&N on the logistics of the split, which may or may not result in the spinoff of a separate public company.
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Fool contributor Evan Niu owns shares of Apple and Amazon.com, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Amazon.com, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Microsoft, and Amazon.com. Motley Fool newsletter services have also recommended writing puts on Barnes & Noble, as well as creating bull call spread positions in Microsoft and Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.