--Pearson has option to purchase additional 5% stake in Barnes
& Noble's digital business unit
--Barnes & Noble will now own 78.2% of Nook Media
--Microsoft to retain 16.8% stake in Nook Media
(Adds Barnes & Noble's warning about holiday sales results,
beginning in first paragraph.)
By Melodie Warner
Barnes & Noble Inc. (BKS) said publishing and education
company Pearson PLC (PSO, PSON.LN) has agreed to invest $89.5
million for a 5% stake in its digital business unit, Nook Media
LLC, while also warning that its preliminary holiday-sales results
missed expectations and the Nook business won't meet its prior
projection for the fiscal year.
Bookstore operator Barnes & Noble will now own 78.2% of Nook
Media, and Microsoft Corp. (MSFT), which made a $300 million
investment earlier this year, will own 16.8%. Pearson will also
earn the option to purchase up to an additional 5% interest in Nook
Media, subject to certain conditions.
Shares of Barnes & Noble were up 9% to $15.64 in recent
trading, pushing the stock into positive territory for the
year.
Barnes & Noble said the investment will improve customer
access to digital content by pairing Pearson's online-learning
expertise with Nook Media's digital content and services.
"We formed Nook Media to be a leader in the exploding market for
digital content," said Barnes & Noble Chief Executive William
Lynch. "Pearson is a forward-thinking company similarly focused on
reading and learning, with powerful assets and a terrific
management team."
The bookselling industry has been in transition as readers are
drawn to a growing array of digital devices. The Nook e-reader is
in a highly competitive and expensive battle with tablets from
Apple Inc. (AAPL), Google Inc. (GOOG) and Amazon.com Inc.
(AMZN).
Barnes & Noble said it plans to report holiday-sales results
Thursday but warned they likely fell short of expectations and the
Nook business won't meet goals for the year ending in April. The
company didn't offer any specific metrics.
Barnes & Noble reported last month it swung to a fiscal
second-quarter profit amid strong sales of Nook-related content.
Total sales slid 0.4% as the consumer-bookstore division's revenue
declined, but total Nook revenue jumped 5.6% to $160.3 million,
thanks to a 38% surge in content sales. The company also said unit
sales for those devices doubled over the four-day Thanksgiving
weekend.
Write to Melodie Warner at melodie.warner@dowjones.com
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