Barnes & Noble Expands Digital Offering with Microsoft

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The world’s largest bookseller Barnes & Noble (NYSE:BKS) joined software giant Microsoft in a partnership that will “accelerate the transition to e-reading”valued at US$1.7 billion, the NYSE-listed company announced Monday, April 30th.

Microsoft was reported to invest US$300 million for a 17.6% stake in the joint venture with the rest of the 82.4% to be held by Barnes & Noble in a still unnamed new subsidiary now simply dubbed as “NewCo”.

Going Digital

Back in February, Barnes & Noble had already contemplated separating its digital business to “maximise shareholder value”.

But some analysts cautioned that going digital may terrify publishers and could give impetus in the decline of the industry.

“This deal with Microsoft could be the saviour of its digital division but won’t help the bricks and mortar business,” according to Managing Director Tim Coates of e-book content provider Bilbary.

In Barnes & Noble’s statement released Monday, however, the company acknowledged that e-reading is now “revolutionising the way people consume, create, sharae, and enjoy digital content”.

Microsoft, on the other hand, seeks to take a slice of the e-reading business, which its rivals Apple, Google, and have already established.

Business Expansion

“Microsoft’s investment in Newco, and our exciting collaboration to bring world-class digital reading technologies and content to the Windows platform and its hundreds of millions of users, will allow us to significantly expand the business,” said Barnes & Noble Chief Executive William Lynch.

Barnes & Nobles noted a 32% increase in sales in its digital offerings in the third quarter of the company’s fiscal year, driven by the popularity of the Nook device, a rival of Amazon’s Kindle.

“The shift to digital is putting the world’s libraries and newsstands in the palm of every person’s hand, and is the beginning of a journey that will impact how people read, interact with, and enjoy new forms of content,” said Andy Lees, President of Microsoft.

“Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories, but to be part of them. We’re on the cusp of a revolution in reading,” Mr. Lees said of the venture.

Company Spotlight

Barnes & Noble is a leading content, commerce and technology company with a strong market presence in the bookselling industry in the United States.

In 2009, the company introduced Nook®, an Android-based ebook reader, to compete with rivals in the market.

Share of Barnes & Noble jumped 62% to US$22.2 on the New York Stock Exchange at 7:00 PM GMT, following the news.

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