Barnes & Noble Inc. (NYSE:BKS) and its Nook product became a lot more viable this morning, after Microsoft (NASDAQ:MSFT) invested $300 MM into a subsidiary holding the Nook college books business. The implied valuation of the entity is $2 billion. I don't think that the Nook would have lasted without a company with more clout and cash stepping in to assist in the endeavor. It seems like a reasonable bet for Microsoft except I do think the implied valuation seems pricey. I would prefer to see Microsoft buy Research in Motion (RIMM) which would boost earnings even if they offered a reasonable premium, and would certainly make the company a more viable competitor in the mobile phone market. This is a huge win for Barnes & Noble as they retain 82% of the subsidiary and they have a partner in addition to John Malone ready to bring in additional cash.
Disclosure: I am long MSFT, RIMM.