Dive Brief:

• Barnes & Noble said Thursday it has bought Microsoft’s share in its Nook business for $125 million in cash and stock. Microsoft acquired a 17.6% stake in 2012 for $300 million.

• The bookseller, which has been struggling lately to regain its footing in the face of competition online and the failure of its Nook business to take off, also reported that its Q2 earnings (for the quarter ended Nov. 1) slid to $68 million, down from $76 million in 2013. Retail sales fell 3.6%, in part due to the number of store closings.

• Nook had a promising start, but has been eclipsed in the e-reader market by Amazon’s Kindle and has dragged the retailer down. The company says it will likely split its Nook business off, which many analysts said would be wise.

Dive Insight:

Nook is certainly down, but it may not be out just yet. It's in need of a burst of new energy, perhaps from new partnerships and new plans. In any case, splitting the e-reader and retail business is likely to be good for both sides of Barnes & Noble’s business. As a separate company, Nook could attract new partners and the bookseller could concentrate on its retail sales, which, in the big picture, aren’t really all that bad.