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With The Backing Of Microsoft Corporation (MSFT), Is Now The Time To Buy This Company? – Barnes & Noble, Inc. (BKS)

As far as the NOOK division goes, there have been some interesting developments lately.  Back in October, Microsoft and Barnes and Noble announced that their joint venture would be called NOOK Media LLC, which will remain a subsidiary of Barnes and Noble.  Microsoft has a 17.6% stake in the business in exchange for its $300 million investment.  (Note: this fact alone implies that the new venture is valued at $1.7 billion, which is over twice the current market cap of B&N.)  The goal of Microsoft getting involved is to bring one of the world’s largest digital libraries to their devices via a NOOK reading app specifically for Windows 8.

So, will this venture be successful?  Only time will tell.  The NOOK accounts for approximately 25% of the e-book market share, with most of the rest belonging to Amazon’s Kindle.

In all fairness, I cannot in good conscience recommend that people invest money in Barnes and Noble that they can’t afford to lose.  While I firmly believe that the potential rewards far outweigh the risk, especially if the NOOK begins to gain ground now that Microsoft is putting its might behind the device’s success, this stock is still a speculation play at this point.

Barnes and Noble had negative earnings for the past two years, and this is projected to continue until 2015 at least.  With the company set to report earnings on Feb. 19, any indication from management of an expected return to profitability would be very welcome news.  I’m not saying you should dive right in, but this company is cheap enough and has enough that could go well that it is worth keeping an eye on.

The article With The Backing Of Microsoft, Is Now The Time To Buy This Company? originally appeared on and is written by Matthew Frankel.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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