NYT Still Worth $7.50, Despite Free Nooks Promotion

January 11th, 2012 by Trefis Team
-4.84%
Downside
50.43
Market
47.99
Trefis
NYT: New York Times logo
NYT
New York Times

New York Times (NYSE:NYT) and book retailers Barnes & Noble have struck a unique agreement – subscribe to NYT and get the Nook devices for free or at a discount. [1] NYT has been pushing its digital content aggressively, especially as the media giant is cleaning up its non-strategic assets like local newspapers. While the Nook is still a small player in the e-reader compared to Amazon’s (NASDAQ:AMZN) Kindle reader, the deal should provide an upside to NYT’s digital subscriptions.

See our full analysis for NYT

Did Someone Say Fire Sale?

Investors were already skeptical of the Nook, given the competition from Kindle devices. To make things worse, Barnes & Noble recently reduced its Nook sales forecast, even suggesting that it might spin-off Nook as a separate business. [2]

Barnes & Noble’s latest deal spans both NYT and People Magazine, and looks makes the promotion look like a fire sale for the Nook, similar to HP’s TouchPad. [3] NYT is not complaining as potential users get free/discounted Nook devices as an incentive for a one-year subscription of NYTimes.com.

We currently have a price estimate of $7.50 for NYT’s stock, which is roughly 3% below the current market price.

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Notes:
  1. Barnes & Noble Offers Incredible Savings on Award-Winning NOOK Devices with One-year NOOK Subscription to The New York Times, Barnes & Noble Press Releases, 9th Jan 2012 [↩]
  2. Barnes & Noble may spin off Nook, shares plunge, The Globe and Mail, 5th Jan 2012 [↩]
  3. HP TouchPad fire-sale sells out in minutes, cripples eBay, Slash Gear, 12th Dec 2012 [↩]