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pww.comBarnes & Noble, Inc., Microsoft Corporation - Special Call - NasdaqGS:MSFT

NasdaqGS:MSFT

** Summary of Executive Statements**

William Lynch (CEO of Barnes & Noble)

  • Introduction and Context:

    • Excited about the partnership with Microsoft.
    • Forming a new subsidiary (Newco) to capitalize on the growing market for digital content in consumer and education segments.
    • Newco will include the NOOK business and Barnes & Noble College, aiming to be a leader in the digital content market.
    • Partnership with Microsoft will create compelling experiences across Windows devices, allowing users to buy, consume, create, and publish content in new ways.

  • Financial Details:

    • Microsoft will invest $300 million in Newco at a post-money valuation of $1.7 billion, acquiring a 17.6% equity stake.
    • Barnes & Noble will retain 82.4% ownership of Newco.
    • Microsoft is an ideal partner due to its global reach and technology assets.

  • Strategic Vision:

    • NOOK has been an innovation leader in reading technology and has one of the largest catalogs of digital content.
    • Focus on extending the NOOK digital bookstore to hundreds of millions of Windows users in the U.S. and internationally.
    • Potential to enhance services for schools in managing and distributing digital course materials.
    • Strong ongoing relationship with Barnes & Noble retail stores to leverage the symbiotic relationship between retail and digital platforms.

  • Future Plans:

    • Exploring strategic separation of the digital business to maximize shareholder value.
    • This partnership positions Newco in a strong competitive position and provides significant value to Barnes & Noble shareholders.
    • Promises consumers the ability to read across devices of their choosing, including Windows, iOS, and Android platforms.

Andrew Lees (President of Microsoft)

  • Introduction and Context:

    • Excited about the partnership with Barnes & Noble.
    • Shared perspective on the massive growth opportunity in the digital reading market.
    • Agreement is multifaceted, focusing on developing future innovations to accelerate eReading across Windows devices.
    • eBook sales are forecasted to grow significantly, indicating a digital reading revolution.

  • Strategic Vision:

    • Technology will enable a more immersive reading experience through animations, multimedia, real-time updates, collaboration, and sharing.
    • Complementary technology assets between Barnes & Noble and Microsoft will drive faster and more compelling innovations in digital content.
    • Developing an app for Windows 8 to bring one of the world's largest digital libraries to hundreds of millions of Windows users.
    • Strategic relationship will create new scenarios related to content consumption, creation, and publishing.

  • Market Opportunity:

    • Both consumer and education markets are significant opportunities.

    • Interactive and multimedia capabilities in children's books and educational materials offer compelling experiences.

    • Partnership is a long-term opportunity to define the future of reading and learning.

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