Finding Gems Like Barnes & Noble
This morning the market was treated to news that Microsoft (MSFT) would be investing $300 million into the Nook eReader, Barnes & Noble's (BKS) profitable e-book reader. Microsoft will take a 17.6% stake in the soon-to-be-spun, fast-growing electronic book business, valuing it about $1.7 billion. Prior to this news, Barnes and Noble had a market cap $790 million. This morning shares are up nearly 90%.
My guess is that 99% of investors will not be treated to this market gain this morning when the check their portfolio (count me in the bottom 99%). The reason is because very few investors take the time to peel back the onion and see if there is more than meets the eye. By all accounts, Barnes and Noble was the sole retailer left in a declining industry. Thanks to Amazon (AMZN), very fewer people are buying books at bookstores when you can save as much as 60% buying the same book online. For a company like Barnes and Noble that was stuck with the added pain of expensive real estate costs, the writing was clearly on the wall. As a result, very few looked at Barnes and Noble long enough to discover the value of the Nook eReader business....445 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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