Microsoft announced partnership with Barnes and Noble back in 2012 and even created a new joint venture company called Nook Media LLC. Since then, the only thing that came of out partnership was Barnes & Noble’s Windows 8 app. Recently it was rumored that B&N has stopped developing apps for Windows platform since Microsoft is developing its own Xbox branded reader with content powered by Barnes & Noble in the backend. Earlier this month, we reported that in an interview to GeekWire, Barnes & Noble CEO Mike Huseby said that they are in a very, very good relationship with Microsoft despite the recent partnership with Samsung. B&N is in contact with Microsoft on an ongoing basis about things that they doing together. Mike also reminded us that Microsoft is a partial owner, about 17 percent, of the Nook Media entity.
Today, B&N announced that their board has approved to separate the Barnes & Noble Retail and NOOK Media businesses.
We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of NOOK Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. We fully expect that our Retail and NOOK Media businesses will continue to have long-term, successful business relationships with each other after separation.”
In the forwards looking statement mentioned in the press release, B&N cited risks involved in separation of the deal.
…… the risk that the transactions with Microsoft and Pearson do not achieve the expected benefits for the parties or impose costs on the Company in excess of what the Company anticipates, including the risk that NOOK Media’s applications are not commercially successful or that the expected distribution of those applications is not achieved, risks associated with the international expansion contemplated by the relationship with Microsoft, including that it is not successful or is delayed, the risk that NOOK Media is not able to perform its obligations under the Microsoft and Pearson commercial agreements and the consequences thereof,….
I think Microsoft is a loser in this B&N’s new decision to separate their businesses. Microsoft is yet to comment on the deal.