How Microsoft Turned $300 Million Into $116 Million
That leaves Microsoft with a loss of about $238 million on the deal. It also gives Barnes and Noble a cleaner exit if it wants to spin off the Nook business.
The joint venture kicked off in April 2012 when Microsoft invested $300 million for a 17% stake in Barnes & Noble. The companies announced the deal with a lot of fanfare, but the details were always vague - they built a Nook app for Microsoft's Windows 8 operating system, and earlier this year, they said they were working on something called a "Microsoft Consumer Reader," which may have been a new kind of e-reading app. It never emerged.
The deal also ended a lawsuit between the companies.
Since the early 2000s, Microsoft has been approaching companies to license its patents the company believes are being violated. Many companies, including a lot of Android resellers, have agreed, and Microsoft may be earning more than $2 billion a year from these licenses.
But Barnes & Noble initially refused to take a license for its Nook reader, which was based on Android. And in the subsequent lawsuit, it started talking about some of the details of the negotiations with Microsoft, like its demands for between $5 and $15 per device, and the precise patents that Microsoft claimed were being infringed.
The joint venture made that lawsuit go away. So even if Microsoft never got much else out of the deal, one could argue that paying a couple hundred million to keep its patent licensing program cranking along was a pretty good bargain.
Note: This story originally misstated how much Barnes & Noble paid to get out of the deal. The actual figure, including stock, was $116 million.
- I quit McKinsey after 1.5 years. I was making over $200k but my mental health was shattered.
- Some Tesla factory workers realized they were laid off when security scanned their badges and sent them back on shuttles, sources say
- I tutor the children of some of Dubai's richest people. One of them paid me $3,000 to do his homework.
- Why are so many elite coaches moving to Western countries?
- Global GDP to face a 19% decline by 2050 due to climate change, study projects
- 5 things to keep in mind before taking a personal loan
- Markets face heavy fluctuations; settle lower taking downtrend to 4th day
- Move over Bollywood, audio shows are starting to enter the coveted ‘100 Crores Club’