Can the Nook Find a Home? – Barnes & Noble, Inc. (BKS), Microsoft Corporation (MSFT), Apple Inc. (AAPL)

Of course, everyone is chasing Apple Inc. (NASDAQ:AAPL)’s iPad, the worldwide leader in the tablet segment. Consumers have increasingly shifted from e-reader devices to multi-purpose tablets that have web browser and e-mail capabilities. Apple Inc. (NASDAQ:AAPL) has continued to ride its overwhelming product popularity to dominate the segment, with 22.9 million iPad devices sold in its latest fiscal quarter.

While Apple Inc. (NASDAQ:AAPL)’s sales grew 18% in the first quarter of FY2013, its operating income fell slightly versus the prior-year period, leading to a recent sharp decline in its stock price. The company’s gross margin declined due to higher manufacturing costs and lower price points for new products, including the popular iPad Mini. However, Apple Inc. (NASDAQ:AAPL)’s operating margin remains above 30% and the company generated strong growth in digital downloads through its iTunes store. With over $130 billion in excess cash, the company has an unmatched ability expand its content library and pursue the development of the next generation of reading devices.

Barnes & Noble is at a crossroads and is relying on its partners to help fund product development activities at its Nook unit. Given competition and tech advances in the reader device market, Barnes & Noble, Inc. (NYSE:BKS) is relatively capital-constrained and needs to offload the unit to a larger, more diversified enterprise. While Nook looks for its own happy ending, investors should watch this drama from the sidelines.

The article Can the Nook Find a Home? originally appeared on Fool.com and is written by Robert Hanley.

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