This Could Be The Beginning of the End for Barnes & Noble, Inc. (BKS)

If Microsoft Corporation (NASDAQ:MSFT) purchased the NOOK business, it would presumably phase out the hardware production while adding the NOOK bookstore directly into Windows 8. Microsoft would gain a pre-existing digital book business, and might be able to sell some Surface tablets to NOOK devotees.

Given that Barnes & Noble, Inc. (NYSE:BKS)’s market cap is less than a billion, such a purchase would amount to a significant catalyst for the stock if it were to take place. But at this point, it remains mere speculation.

Amazon claims another victim

Barnes & Noble’s release on Tuesday suggests that Amazon.com, Inc. (NASDAQ:AMZN) is about to claim another victim.

One can argue that the NOOK HD is superior to Amazon’s competing Kindle Fire. In a recent article comparing the two, CNet’s Brian Tong concluded that the NOOK HD was a better buy. And yet, to date, the Kindle Fire has far outsold the NOOK HD.

It could be Amazon.com, Inc. (NASDAQ:AMZN)’s larger advertising budget, or its digital presence — after all, the types of consumers more inclined to go with digital books (younger, more Internet savvy) might also be Amazon’s core customer.

But the death of the NOOK HD should be taken as a good sign for Amazon’s shareholders — it illustrates Amazon’s continued retail prowess.

Investing in Barnes & Noble

Tuesday’s Barnes & Noble, Inc. (NYSE:BKS) selloff seems justified. Unless one believes that Microsoft is about to cut a big check, the stock should likely be avoided.

Granted, physical books won’t disappear anytime soon — too many people still prefer them over digital copies. But if Barnes & Noble’s retail business is also shrinking, perhaps there just isn’t a market for dedicated, warehouse-style bookstores anymore.

The article This Could Be The Beginning of the End for Barnes & Noble originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Joe Kurtz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Microsoft. Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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