Microsoft (MSFT) is reportedly ready to buy Barnes & Noble (BKS) out of the two companies’ joint venture that controls the Nook e-reader, digital store and college bookstore. The online media is the key asset of interest; Microsoft is reportedly ready to dump Nook’s college bookstore business and phase out the Android tablet itself. This would leave the digital assets, which Microsoft could bring to its Surface tablets and to other Windows devices.
It’s been just over a year since Microsoft spent $300 million for 17% of the Nook Media partnership. Now the software giant is said to be offering a billion dollars for the whole business, implying that it sees less value in Nook than it did a year ago. During the three months ending Jan. 26, Nook’s revenue was $316 million, down 26% from the year-ago quarter.
Just six days ago, Barnes & Noble said it would add the Google Play store to some of its Nook tablets. The company said a shortage of mobile apps was the biggest reason consumers had not been choosing the Nook. Barnes & Noble says it expects Nook sales to pick up with Google Play on board, so the bookseller may not be willing to let go of the asset right now, or may demand a higher price.
If Microsoft buys Nook with Google Play, it could find Nook outselling Surface in the short term. Barnes and Noble has sold about 10 million Nook tablets in the United States so far. Microsoft shipped roughly 3 million Surface tablets worldwide in Q1, according to Strategy Analytics.
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