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发帖数: 29846 | 1 By GINA CHON And SHIRA OVIDE
Microsoft Corp. MSFT +0.11% is investing at least $605 million in Barnes &
Noble Inc.'s BKS +51.75% Nook digital-book business, as the software giant
pushes deeper into the e-books business and props up a rival to the iPad and
Amazon's Kindle.
Barnes & Noble's stock jumped around 100% in pretrading on news that
Microsoft was investing $300 million in their Nook e-reader. Gina Chon
reports on Markets Hub.
From humble beginnings to a bookselling behemoth, Barnes & Noble has seen
ups and downs over the decades as it tried to straddle the world of paper
books and e-books.
Microsoft will have a 17.6% stake in a new subsidiary for the Nook and Barne
's college-text businesses in a transaction that values them at $1.7 billion
, the companies said. That compares with Barnes & Noble's current market
capitalization of about $791 million and could fuel the argument of some
analysts and investors that the digital business should be separated from
the retail division.
Shares of Barnes & Noble, which has struggled with a slide in traditional
book sales and heavy investments in its Nook digital business, surged 68% on
the news.
Microsoft is developing a new version of its operating system, Windows 8,
designed to run on both tablets and computers, but it has lagged both Apple
Inc. and Amazon.com Inc. in the tablet and e-reader markets. The Nook, like
Amazon's Kindle, runs on Google Inc.'s Android software.
In addition to a $300 million investment Microsoft announced Monday in the
new subsidiary, Microsoft also pledged to dole out $180 million—or $60
million a year for three years—to the subsidiary in the form of revenue-
sharing guarantees, according to a copy of the contract filed Monday with
the Securities and Exchange Commission.
Barnes & Noble will create an e-reading application for Microsoft-powered
mobile devices and computers, and the companies will share revenue from
sales of e-books and other content, according to the contract. Microsoft
will make the $60 million annual payments as an advance to the subsidiary—
dubbed NewCo—-in quarterly installments over three years.
Microsoft also pledged $25 million a year over five years, or $125 million,
to assist in NewCo's planned international expansion, according to the
companies' contract. The agreement says the money is earmarked to assist the
Barnes & Noble business "in acquiring local reading content and technology
development."
The alliance comes after the companies openly feuded over the Nook.
Microsoft last year sued Barnes & Noble and the manufacturers of the Nook,
charging the device infringed on its patents. Barnes & Noble said Microsoft
was trying to "bully" smaller companies that used versions of Google Inc.'s
GOOG -1.65% Android operating system, as Barnes & Noble does for the Nook.
As part of the Microsoft investment, the two parties have settled their
patent litigation, and in the future, Barnes & Noble and the new subsidiary
will have a royalty-bearing license under Microsoft's patents for the Nook,
the companies said.
Barnes & Noble in January said it was exploring a spinoff of the Nook
business. Monday it said it is still exploring how a separation of the
subsidiary may occur but cautioned such a move may not happen.
For the bookseller, the investment will mean access to more international
markets, since Windows 8 is used across the globe. Currently, besides the
Nook device, the Nook book-buying application is available only on iPad and
Android devices.
"Microsoft's investment in [the new subsidiary], and our exciting
collaboration to bring world-class digital reading technologies and content
to the Windows platform … will allow us to significantly expand the
business," Barnes & Noble Chief Executive William Lynch said in a statement.
New York-based Barnes & Noble has had to invest heavily in the digital-books
business to compete with Amazon.com Inc. AMZN +2.23% and iPad maker Apple
Inc. AAPL -3.15% Barnes & Noble in February said that for its fiscal third
quarter, its digital business reported a loss, before interest, taxes,
depreciation and amortization, of $93.7 million, widening from a loss of $50
.5 million a year earlier.
The company attributed the wider losses to continued investment, including
its aggressive holiday advertising campaign that it said helped boost Nook
sales at third-party retailers including Target Corp. TGT -0.51% and Wal-
Mart Stores Inc. WMT -0.20%
Still, strong growth in sales of devices and digital content meant Barnes&
Noble.com's total sales rose 32% to $420 million.
The stakes are high for Microsoft, after it allowed Apple's iPad a two-year
head start to snag attention and sales from consumer- and business-computer
users.
The Windows 8 operating system is the most dramatic reworking of Microsoft's
key franchise in at least 17 years, and it is the Redmond, Wash., company's
first significant effort to grab a foothold in the fast-growing tablet-
computer market.
Microsoft also is prepping a Windows 8 digital storefront for applications,
which have become an increasingly important selling point for tablet
computers and other mobile gadgets.
Microsoft in February released a test version of Windows 8 to the public,
along with a storefront that had roughly 100 apps. By contrast, there are
more than 585,000 apps available for Apple's operating system for the iPhone
and iPad. The February preview of Microsoft Windows 8 app store featured
Amazon's Kindle app for reading electronic books.
Microsoft has plenty of financial resources for a Barnes & Noble investment.
The company had about $59.5 billion in cash, cash equivalents and short-
term securities as of March 31, according to securities filings.
—Jeffrey A. Trachtenberg contributed to this article. |
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