Barnes & Noble Profit Down, To Buy Microsoft's Stake In Nook; Stock Fall 10%

(RTTNews) - Barnes & Noble Inc. (BKS) on Thursday reported a drop in profit for the second quarter, as the bookstore chain's revenues continue to decline, with earnings missing Wall Street estimates.

In another development, the company said it will buy Microsoft Corp.'s (MSFT) 17 percent stake in the Nook business for about $125 million.

New York-based Barnes & Noble said it will acquire Microsoft's entire stake in the Nook Media LLC for $125 million in cash and stock and expects to split itself into two companies by end of August 2015.

In April 2012, Microsoft initially invested $300 million in Barnes & Noble's Nook business, which include the digital books and Nook e-reader device.

Barnes and Noble is all set to split into into two companies -- the book retail business and the Nook digital business. The separation will happen at the end of August 2015, later than expected.

Barnes & Noble's second-quarter profit dropped to $12.3 million or $0.12 per share from $13.2 million or $0.15 per share a year earlier. On average, four analysts polled by Thomson-Reuters estimated earnings of $0.31 per share for the quarter. Analysts' estimates typically exclude one-time items.

Revenues for the second quarter declined 2.7 percent to $1.69 billion from $1.73 billion last year. Analysts had a consensus revenue estimate of $1.69 billion for the quarter.

Retail comparable store sales declined 1.5 percent. Excluding Nook products, retail comparable store sales increased 0.5 percent.

Looking ahead, the company expects retail comparable bookstore sales and college comparable sales to decline in the low-single digits.

BKS is currently trading at $19.94, down $2.30 or 10.34%, on the NYSE.