

Barnes & Noble’s Nook Unit Is Worth More Than Its Parent Company  - JumpCrisscross
http://dealbook.nytimes.com/2012/04/30/barnes-nobles-nook-unit-is-worth-more-than-its-parent-company/?nl=business&emc=edit_dlbkpm_20120430

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kooshball
This has happened before in the past with Palm.

[http://www.nytimes.com/2000/03/03/business/offspring-
outweig...](http://www.nytimes.com/2000/03/03/business/offspring-outweighs-
parent-as-offering-hits-the-market.html?pagewanted=all&src=pm)

~~~
asmithmd1
That is a funny situation 3Com owned 94% of Palm and 3Com was valued at $28
billion - $23 billion LESS than the value of its holdings in Palm.

What is the stock or option play here when you know two stocks will move
closer but don't know if one will move up or the other down? This happens with
EMC who owns 80% of VMWare

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atto
Usually there's a reason that they're priced that way (market uncertainty,
debt, etc), but Palm and 3Com is a good example when it works out. You may
have problems shorting though.

Sell shares/buy puts on the overpriced company (in your example, Palm), buy
shares/buy calls on the underpriced company (3Com). Usually implied vol is
pretty high, so you'll definitely pay a premium for the long options position.
Alternatively, you could sell premium, but that is quite a dangerous position
for a retail trader.

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pgeorgi
The value Microsoft assigned to the Nook unit probably prices in that B&N
won't try to disrupt Microsoft's Android Tax business unit any longer.

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ZeroGravitas
But does that business even exist? I'd love to see some investigative
reporting on this issue. Most of the other deals have hints of _quid pro quo_
s like funding advertising for Windows laptops, so basically those companies
are taking money in return for PR against non-Microsoft OSes, but continuing
to use those non-Microsoft products themselves. It's all very odd.

The Nokia deal could also be seen as Nokia being worth more to Microsoft than
to Google because if they adopted Android it could have seriously tilted the
market away from all Microsoft's products.

It reminds me of idea that big companies talked about their potential Linux
migrations simply to get big discounts from Microsoft. Though that strategy
seemed to work for Microsoft, this time I'm not so sure.

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glesica
I'm not necessarily saying you're wrong, but supposedly MS gets $5 for every
Android HTC sells... [http://www.businessinsider.com/htc-pays-microsoft-5-per-
andr...](http://www.businessinsider.com/htc-pays-microsoft-5-per-android-
phone-2011-5)

Site here says that in 2010 HTC was selling Androids at a rate of around 18
million per year... [http://www.fool.com/investing/high-
growth/2010/05/27/deciphe...](http://www.fool.com/investing/high-
growth/2010/05/27/deciphering-androids-smartphone-sales-figures.aspx)

So that means around $90 million in income for MS, for which they did
basically nothing, pure profit.

On the other hand, $90 million just isn't that much when you're MS. Even if
they had a similar deal for all Androids (which they don't AFAIK), it would
still only be $180 million, less whatever they gave up to get those deals
done.

So MS _does seem_ to be making money on Android, but the amount is clearly
dwarfed by their other businesses.

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thematt
If I were Amazon right now, I'd start giving away a Kindle for free to Prime
subscribers. B&N _has_ to generate revenue from the hardware they sell,
otherwise they're in deep trouble financially...Amazon can easily beat them in
the race to the bottom and still make it up selling content.

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djt
Amazing to see how something that seems so obvious now was missed by Borders.
The Nook is in a great position now much like Instagram-Facebook in that it is
one of the few competitors with any traction versus the Kindle and so they
make a very nice target for anyone competing against Amazon.

~~~
alanfalcon
It's pretty radical for a brick and mortal bookseller to go after the eBook
market so aggressively, to the point where even now I find it hard to call it
"obvious." There are some really nice touches, too, like the ability to spend
an hour a day reading any eBook on your Nook while physically inside a Barnes
and Noble location. Not only does that feel less than obvious to me, it feels
really well designed and thought out. I admit that before walking into a B&N
and playing with one of the recent model Nooks I thought that the device was a
case of too little too late, but I left kind of wanting one.

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losvedir
> * like the ability to spend an hour a day reading any eBook on your Nook
> while physically inside a Barnes and Noble location.*

Oh, that's really cool. I didn't know that! I bet they could set up some
pretty great partnerships with, e.g., Starbucks, too. If they did that, and I
could go hang out at a coffee shop, sip a drink, and read anything I want for
an hour... I'd buy it in a heartbeat.

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balbeit
From a shareholder's perspective, does this mean Barnes & Noble is now, in
essence, an e-book reader manufacturer/distributor with a retail presence? And
the retail presence just happens to be doing terribly at everything except
selling the Nook?

I'm trying to wrap my head around what exactly this means for Barnes & Noble.
Any insight would be appreciated!

~~~
thematt
Hard to say at this point, but I'm not the least bit optimistic. At the rate
B&N is burning through cash, Microsoft simply extended their runway an extra
three quarters. The fundamental problems with Nook and B&N still exist, so
until they announce some compelling change in business direction (other than
an app for Win8) I'm not betting on that horse.

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taligent
I am surprised I haven't seen more people talking about the potential of Nook
moving to Windows Mobile platform. Especially given Microsoft's latest work in
getting WM to run on low end devices and the generally average Android
experience.

If they could maintain the existing level of polish it would be a huge win-win
for both Nook and Microsoft.

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rbanffy
Why would that be a win for B&N? Nokia got a lot more for ditching it's own
OS. And my Nook Color has always been smooth, both with its original software
and after having Cyanogen installed. It now runs Nook, Kindle and Google Books
very well. I can't imagine WP7 would be an improvement.

Besides that, you forget the e-paper model, which is selling very well - WP7
can't run on those.

