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Microsoft to Invest $300 Million in Barnes & Noble (MSFT, BKS)

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Barnes & NobleMicrosoft Corp. (NASDAQ: MSFT) entered into an agreement with Barnes & Noble (NYSE: BKS) on Monday which would allow the Software giant to get a foothold in e-book and college textbook business.

According to the deal, Microsoft will invest $300 million in the venture. The two teaming companies will create a subsidiary for Barnes & Noble with Microsoft having a stake of 17.6 percent.


At present the e-book market is dominated by Amazon’s (NASDAQ: AMZN) Kindle.

The deal emphasizes the importance of growing e-books business. Both traditional booksellers and technology companies are vying with each other to gain a strong foothold in highly competitive market. While, there’s no definitive data on e-books business, some rough estimates point out that e-book business account for 20% of total book sales in the U.S. market.

For Microsoft, this venture holds lots of significance. The company made a humble beginning in 2000 and has never been able to develop much influence as it could not build a substantial database for its e-library.

In 2007, Amazon, with its launch of Kindle, grabbed the e-book market, creating a serious challenge to bricks-and-motors-booksellers like Barnes & Noble.

Microsoft’s rivals like Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) now have their own e-book stores. All three tech giants are building businesses that encompass hardware, software and content in an “ecosystem,” and e-books and readers are part of the puzzle.

Following the deal, stocks of both companies soared on the Wall Street. While Barnes & Noble Inc.’s stock leaped up $7.07, or 52 percent, to close trading at $20.75, Microsoft’s stock gained 4 cents to $32.

 

 

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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