NEW YORK (TheStreet) -- Shares of Barnes & Noble (BKS) are tanking, sharply down 9.13% to $20.21 on high volume in morning trading Thursday, after the bookstore retailer terminated its agreement with software giant Microsoft Corp. (MSFT) for its Nook e-reader, the Wall Street Journal reports.
The bookstore company bought out Microsoft's preferred interest in Nook for $120 million in cash and stock, saying the move provides a clearer path toward the split of its business. Microsoft had a stake of 16.8% in the Nook branch through preferred shares as of September 9, according to a regulatory filing.
Barnes & Noble said during its second quarter earnings conference call that publishing company Pearson PLC (PSO) has the right to sell its stake to B&N under the same terms as Microsoft. Last year, Pearson acquired a 5% stake in the Nook division for $89.5 million.
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For its second quarter, Barnes & Noble reported earnings of 12 cents per share, worse than the 31 cents per share analysts estimated. Revenue for the quarter was $1.69 billion, in line with the consensus estimate.
About 1.22 million shared traded hands as of 10:40 a.m. in New York, more than double its average trading volume of about 552,004 shares a day.