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Microsoft and Barnes & Noble Call Quits on Partnership

The $300 million investment deal between Microsoft and Barnes & Noble is coming to an end, according to two 8-K Securities and Exchange Commission filings posted by the bookseller on Thursday.

Microsoft and B&N struck an investment deal in 2012 in which Microsoft would take an estimated 17.6 percent stake in a new college books subsidiary called "Newco." The deal also entailed the two companies reaching a settlement in a case concerning the use of the Linux-based Android operating system in B&N's Nook electronic reader devices.

Microsoft and B&N had fought a rather bitter legal dispute over the Linux use. Microsoft claimed the Linux use violated some of its patents, while B&N claimed that Microsoft was just abusing the U.S. patent system to support its flagging Windows Mobile and Windows Phone market share. In the end, B&N paid some royalties to Microsoft, while Microsoft invested in B&N's Newco subsidiary.

As part of their collaboration efforts, the two companies collaborated on Nook for Windows 8. It's a reader app for Windows 8 devices. It doesn't appear that B&N ever made a Windows 8-based Nook device, though.

The termination of the deal with Microsoft is expected to take effect at "the end of August 2015." It will enable B&N to "continue its rationalization of the NOOK Digital business" while enhancing its "operational and strategic flexibility," according to B&N's 8-K filings.

B&N's second-quarter 2015 earnings statement indicated that sales of its Nook devices and accessories were down 63.7 percent compared with 2Q 2014 results due to lower volumes. B&N's fiscal second quarter ended on Nov. 1, 2014.

About the Author

Kurt Mackie is senior news producer for the 1105 Enterprise Computing Group.