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Barnes & Noble Needs a Novel Idea

NEW YORK ( TheStreet) -- Barnes & Noble (BKS - Get Report) has made plenty of headlines recently, and it's been for all of the wrong reasons.

There's no denying this company still has value. But you will be hard-pressed to find any analyst willing to bet his or her reputation the bookseller can survive as a self-sustaining entity.

It certainly doesn't appear that William Lynch, the company's now-former CEO, believed in Barnes & Noble's long-term prospects. Lynch, whose background was in e-commerce, came to Barnes & Noble in 2010 at the onset of Barnes & Noble's e-books initiatives. He stepped down Monday, presumably because he no longer saw a competing brand.

I'm just speculating here, but given the fact that Lynch also resigned from the board or directors, I'm inclined to believe there were heated disagreements with the company's strategy, one that includes the decision to exit the tablet market altogether to pursue growth in the retail business. But we've been down this road before -- it's a dead end.

There is now speculation about what this move implies, including the obligatory mention of Microsoft (MSFT), which is always rumored to be interested in buying Barnes & Noble. Again, this is not a new idea. Let's remember that expectations also ran high last year when Microsoft invested $300 million in Barnes & Noble for what amounted to roughly an 18% stake in the Nook business.

Although Barnes & Noble had plenty of use for the cash, it wasn't immediately clear what Microsoft was looking for in return. Fast-forward a year later: Not only has Microsoft failed to offer any rationale for its investment, but Barnes & Noble's future, particularly in the Nook business, is arguably worse off than when Microsoft stepped in.

Another thing: Doesn't it seem odd that after a full-year after Microsoft's investment that Nooks were still being powered by Google's (GOOG) Android platform? Wouldn't it have made sense to have converted them to Windows? This fact introduces questions about whether Barnes & Noble and Microsoft ever had any real discussions about creating synergistic advantages.

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