Barnes and Noble (NYSE:BKS) is selling off the remaining stockpiles of Nooks, and just announced that it will finally go ahead with separating the Nook business from its core. Details are sparse and management was reluctant to give any on the earnings call; however, Microsoft's and Pearson's 2012 investments into the Nook likely mean that the spinoff will take a lucrative core business along with it: the college segment.

With expensive college books fueling a reborn Nook, the second-place e-reader may have a few more chapters left.

The Nook HD and HD+. Source: Barnes and Noble.

The proposed break
By separating its Nook and retail business, the company thinks that both will have a better chance at "optimizing shareholder value." The Nook's losses won't drag down a relatively profitable, if flat-growth, retail business, and investors interested in just the Nook's potential growth could avoid a stodgy, old retail book business.

Of course, if this means breaking off the Nook Media business, that includes its college segment. Nook Media was created in 2012 when Microsoft invested $300 million into the new subsidiary that included the digital device, digital content, and college bookstore businesses. Microsoft also agreed to pay Nook Media $60 million annually for three years after Nook Media developed a Windows 8 application, and $25 million annually for five years to acquire content and technology. For this investment, Microsoft received roughly 17% ownership.

Later in the year, textbook publisher Pearson invested $90 million for a 5% stake in Nook Media -- likely looking at its college bookstore component as a complement.

In the end, Barnes and Noble still owns about 78% of Nook Media. So depending on how much equity it plans to sell, the bookstore will likely remain closely tied to Nook's future. But despite precipitous drops in Nook device and content sales, down 45% and 20%, respectively, over the full year, Nook and its spinoff might have a happier ending if it does end up with the college segment.

College books and Nook
The Nook lost $217 million in EBITDA for the past year. The company is offloading expenses of manufacturing a hardware device by outsourcing the next version to Samsung, which will build a Nook-branded Galaxy Tab 4. The Nook business will then focus on digital content sales, and become less dependent on its namesake device. Still, those heavy losses need to be offset, which is where the college business helps greatly.

The college segment contributed $114 million in EBITDA for the past year, and $111 million the year prior. It's a stable business with monopoly-like power on some campuses. And, it comes with a potential for growth with Yuzu, a digital education platform that allows users to organize, read, and annotate digital text. If Nook can get its expenses in line, the Nook digital content business could run off the college segment's earnings while it finds its feet.

Additionally, Microsoft and Pearson will have a vested interest to make sure their investments weren't a mistake, and both have interests in developing and continuing relationships with the education industry.

Leaving the nest
Nook is still a young business, but it will get a profitable mentor if the college bookstore business splits off with it -- as Nook Media is currently structured. Investors will have to wait to see the details for the company's separation, but the Nook could be sticking around much longer than the competition thought.