Barnes & Noble today announced the termination of its commercial agreement with Microsoft surrounding the Nook business. This comes alongside word that Nook device sales and segment revenues fell sharply year over year. B&N states that ending the partnership gives the company greater “operational and strategic flexibility.” No longer partners in the Nook business, Microsoft is relieved of any duties to fund or support the brand.
The two companies entered into the partnership two years ago with Microsoft initially investing at least $300 million to create Nook Media. An SEC filing reveals that B&N is buying back Microsoft’s 17.6 percent position in the company for just $62 million.
This partnership was created after B&N refused to pay Microsoft patent royalties for its Android-based readers. But nothing substantial ever materialized from the deal. Last March the two companies revised their agreement, paving the way for today’s announcement and a deal with Samsung.
Over the summer B&N teamed up with Samsung to produce a Nook-branded tablet. But apparently even Samsung couldn’t help the dying e-reader pioneer.
The Nook brand had been struggling for several years, but the company today announced dire news. The Nook segment of B&N saw year over year quarterly revenues decrease 41.3% from 2013 levels to $64 million. Device and accessories sales fared even worse, dropping 63.7% from last year. Even Nook digital content sales dropped 21.2% to $45.2 million for the quarter.
Barnes & Noble had jumped into the e-reader waters shortly after Amazon. Its first Nook e-reader was a legitimate contender and many thought the giant bookseller had a chance to stand tall against Amazon thanks to its massive retail network. But the bookseller couldn’t convert the foot traffic into sales.
In June 2014 B&N announced that it would spin the Nook brand off, forming a separate company. It had hoped to complete this transition during the first quarter of 2015, but according to today’s news, the separation will not be done until months later — that is, of course, if there is still anything left to spin-off.