Microsoft takes on Kindle with e-reader stake
MICROSOFT yesterday took its first step into the e-reader game, taking on digital giants Amazon and Apple by joining forces with Barnes & Noble and its e-reader Nook.
The news sent shares of the US book retailer rocketing by a staggering 90 per cent in early trading.
Microsoft will invest $300m (£184.6m) in return for 17.6 per cent of the digital subsidiary.
This values the unnamed new company at $1.7bn – more than double the $823.5m market cap of Barnes & Noble when markets closed on Friday and still considerably more than its $1.3bn valuation after the stock soared yesterday.
The US-based book store, which announced in January that it was considering the strategic separation of its digital business, will own the remaining 82.4 per cent.
Dubbed Newco until a permanent name has been decided, the digital business’ first port of call will be a Nook application for the next version of Microsoft Windows, which will provide “one of the world’s largest digital catalogues of e-books, magazines and newspapers to hundreds of millions of Windows customers”.
Barnes & Noble boss William Lynch said the move is “an important part of our strategy to capitalise on the rapid growth of the Nook business and to solidify our position as a leader in the exploding market for digital content”.
Newco also includes the book retailer’s digital education business, including its study software.
The deal draws a line under an ongoing patent battle between Microsoft and Barnes & Noble. The software giant sued the book store last March because the Nook runs on a Google Android operating system, which Microsoft claimed infringes its patents.
Barnes & Noble’s shares closed up 51.7 per cent at $20.75.