Microsoft May Buy Nook eReader Business

Dennis Faas's picture

Microsoft is reportedly bidding to take over control of the Nook eReader from Barnes & Noble. Internal documents suggest the total buyout price would be around $1 billion.

The documents suggest there will be no more Nook tablet computers following 2014. Instead, the company will concentrate on the dedicated eReader devices. (Source:

The Nook was originally a sole project of Barnes & Noble, which figured it had a natural advantage in pitching the device in stores to customers. Like Amazon (which sells the Kindle), Barnes & Noble runs its own electronic book store, thus making money from both hardware and software.

Microsoft Already A Nook Investor

In April 2012 Microsoft invested $300 million in the Nook business. Last October, Barnes & Noble created a separate business just for the Nook, with Microsoft getting a 17.6 per cent share of the new company.

The Microsoft deal is partly based on the idea of licensing Nook books and other content to make available through the range of Windows 8 tablet devices that launched last fall.

Earlier this year Barnes & Noble dismissed reports it was planning to stop producing Nook hardware. Those reports followed news that Nook eReader sales were on the decline, blamed on customers preferring to pay a little extra and get fully featured tablet computers.

Barnes & Noble has sold roughly 10 million Nook tablets.

Barnes & Noble's Nook A Money Loser

However, documents covering the proposed buyout suggest that the Nook business will wind up in the red. Barnes & Noble's tablet has reportedly resulted in a loss of $262 million during 2012 alone.

That may explain the proposed buyout terms. Based on the money Microsoft has already put into the company and the deals taken by smaller investors, the total value of the Nook business should be around $1.8 billion. That would make the proposed $1 billion price a bargain.

The documents suggest that, after taking over the company completely, Microsoft would immediately ditch the production of Nook tablets, but keep on making dedicated eReaders for some time.

It would then concentrate on licensing the Nook technology and brand name to third-party tablet manufacturers, and focus on running the book sales side of the business. (Source:

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