NEW YORK (TheStreet) -- Since his promotion to CEO of Barnes & Noble (BKS) in January 2014, Michael Huseby has been preparing the struggling Nook digital media division for sale, but so far no suitors have shown themselves. Huseby should look no further than the world's largest retailer, Wal-Mart Stores (WMT) .
Wal-Mart has been steadily investing in and growing its digital businesses and needs to find more ways to compete with Amazon (AMZN) . While Nook has been failing since 2012, it still has underlying assets -- a catalog of millions of e-books, thousands of relationships with publishers and suppliers, and a robust self-publishing services business -- that would be valuable for a company interested in investing in e-books and would be hard to build from scratch.
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"It is definitely a good idea if Wal-Mart cares about being in the book business or the digital media business long term," said book publishing consultant Mike Shatzkin. "If that's a priority for them, acquiring Nook would probably be the cheapest way to ensconce themselves in the game."
With Nook, Barnes & Noble was once solidly the No. 2 e-book retailer in the U.S., behind Amazon, with a reported 25% market share to Amazon's 65%. That was in 2012, when Nook revenues eclipsed $900 million and then-CEO William Lynch charted a course to reach $1 billion in annual revenue.
The plan involved Nook continuing to sell more Nook devices in the growing tablet business, as well as selling more e-books on those devices and increasing digital content sales across the board.
Neither of those things happened.
In the holiday season of 2012, tablet sales around the world rose 75%. Yet, Nook actually sold fewer tablets over that period than it did during the same period the previous year, making it the only major manufacturer of the devices to do so.
At the same time, its content sales were under price pressure from Amazon, which, due to a series of settlements between major publishers and the U.S. Department of Justice, was for the first time free to deeply discount many best-selling e-books. Nook sales in 2013 fell to under $800 million, while losses ballooned to more than $500 million.