If you will recall, the first Microsoft deal for $300 million took Barnes & Noble much higher. B&N shares screamed higher to about $26 for a peak the last time around, with shares peaking around $23 last week on the rumored deal. More reports have surfaced which question or even refute the rumored transaction last week.

The big risk here by our take is that Microsoft might have been risking too much credibility. Calls are out every week to call for the ouster of Steve Ballmer as CEO. Bill Gates is all but history as far as his promotion of the company now. The software giant took a huge $6.2 billion non-cash accounting writedown on the aQuantive just last year.

The dollar amount matters little, because the company has billions upon billions of dollars to play with. What mattered at the time was that Microsoft said its expectations for future growth and profitability were lower than previous estimates and it admitted that the aQuantive acquisition did not accelerate growth to the degree anticipated.

If online media and advertising wasn’t enough, how could reproducing paper books on a device be a huge help for Microsoft? The Nook already faces massive challenges from Amazon.com inc. (NASDAQ: AMZN) via the Kindle and Apple Inc. (NASDAQ: AAPL) from the iPad. Others are coming on strong into the tablet market as well.

Maybe Microsoft just does not want another egg to be thrown in its face. Shares are of Barnes & Noble are down 12.6% at $20.40 in active trading. Microsoft shares are up 0.25% at $32.78 so far this Monday.

A report at TechCrunch now says that Microsoft is considering buying out B&N and other investors for $1 billion. Nook Media includes a college bookstore division and e-books and Nook e-readers and tablets. The report is based on internal documents obtained by TechCrunch.

Nook Media plans to discontinue its use of Android from Google Inc. (NASDAQ: GOOG) by the end of 2014 and transition to a Windows environment for the Nook products. The documents obtained by TechCrunch also indicate that Nook Media would introduce third-party tablets sometime in 2014.

Shares of B&N are getting a real boost from the report, up more than 27% in premarket trading this morning at $22.61, a new 52-week high if it holds. The current range is $11.17 to $19.58. B&N shares topped $26 last year when the Microsoft investment was announced.

The book company reported:

NOOK Media LLC, a subsidiary of Barnes & Noble, Inc. , the leading retailer of content, digital media and educational products, today announced it is expanding its extensive catalogue of reading and entertainment content with the addition of the Google Play digital content experience on its acclaimed NOOK HD and NOOK HD+ devices. With Google Play on NOOK HD and NOOK HD+, customers will now have access to more than 700,000 Android apps and games, millions of songs and more.

Europe believes that it is doing poorly, financially. The European Commission (EC) put out its forecast for gross domestic product (GDP) activity for this year and next. This year, at least, the prediction is awful. All that EC officials can say is that the region’s leaders have to do better. It is a refrain heard repeatedly for government leaders and other policy makers. From the EC report on the slow EU economic recovery:

Following the recession that marked 2012, the EU economy is expected to stabilise in the first half of 2013. GDP growth is projected to turn positive gradually in the second half of the year before gaining some traction in 2014.

Further:

Annual GDP growth this year is now forecast at -0.1% in the EU and at -0.4% in the euro area. For 2014, economic activity is projected to expand by 1.4% in the EU and 1.2 % in the euro area.

And, the deep concern:

Olli Rehn, Commission Vice-President for Economic and Monetary Affairs and the Euro said: “In view of the protracted recession, we must do whatever it takes to overcome the unemployment crisis in Europe. The EU’s policy mix is focused on sustainable growth and job creation. Fiscal consolidation is continuing, but its pace is slowing down. In parallel, structural reforms must be intensified to unlock growth in Europe.”

So far, “whatever it takes” has not been nearly enough.

Twitter Going Public?

Twitter has added an investment banker to its staff. This has prompted speculation that the company may begin the process for an initial public offering. Of course, investors could be gun-shy after the collapses of the share prices of Facebook Inc. (NASDAQ: FB), Groupon Inc. (NASDAQ: GRPN) and Zynga Inc. (NASDAQ: ZNGA). Twitter has not demonstrated that it can bring in a critical mass of advertising, at least not enough for it to be considered a large media company. Analysts estimate that the company could be worth $10 billion currently, which may be much to pricey for Wall Street. The New York Times says of the new Twitter corporate development chief:

The company has hired Cynthia Gaylor, a managing director at Morgan Stanley, to be its head of corporate development, Alexander Macgillivray, Twitter’s chief lawyer, said in a tweet on Thursday.

Adding:

Over her career, Ms. Gaylor has worked on technology deals including the sale of Zappos to Amazon.com, according to her profile on LinkedIn. More recently, she has advised on financing transactions like initial public offerings.

Among her clients are Facebook, Zynga, Netflix and LinkedIn, the LinkedIn profile says. She joined Morgan Stanley in 2006 after working at Hambrecht & Quist, which became part of JPMorgan Chase.

Barnes & Noble Teams with Google

Barnes & Noble Inc. (NYSE: BKS) may have gotten an investment for Nook, its e-reader and e-book operation, from Microsoft Corp. (NASDAQ: MSFT) as the software company presses into tablets. But the book company has decided to hedge it bets. Barnes & Noble management understands what most other tablet producers do. Google Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL) control the application markets for these devices. So, Barnes & Noble has set a partnership with Google. The book company reported:

NOOK Media LLC, a subsidiary of Barnes & Noble, Inc. , the leading retailer of content, digital media and educational products, today announced it is expanding its extensive catalogue of reading and entertainment content with the addition of the Google Play digital content experience on its acclaimed NOOK HD and NOOK HD+ devices. With Google Play on NOOK HD and NOOK HD+, customers will now have access to more than 700,000 Android apps and games, millions of songs and more.

A low-end version of the Nokia Corp. (NYSE: NOK) Lumia may be Microsoft Corp.’s (NASDAQ: MSFT) best opportunity to get share in the mobile sector. (Reuters)

The Consumer Financial Protection Bureau (CPFB) will investigate car lending companies over certain questionable practices. (Reuters)

Its property and casualty business pushes American International Group Inc. (NYSE: AIG) results higher. (Reuters)

Intel Corp. (NASDAQ: INTC) picks it chief operating officer to lead the company and disappoints investors who want change to move the firm beyond PCs. (Reuters)

CEO Ivan Glasenberg of the newly merged Glencore Xstrata says layoffs are critical to his plans. (WSJ)

Verizon Communication Inc.’s (NYSE: VZ) chief executive officer says Verizon Wireless may not pay its annual dividend to Verizon or Vodafone Group PLC (NASDAQ: VOD) in the hope Vodafone will sell its shares. (WSJ)

The Reserve Bank of India cuts its rate to 7.25%. (WSJ)

Barnes & Noble Inc.’s (NYSE: BKS) Nook will start to run Google Inc. (NASDAQ: GOOG) apps. (WSJ)

Shares of LinkedIn Corp. (NYSE: LNKD) fall on a weak outlook. (WSJ)

European Central Bank President Mario Draghi says the bank may decide to ease more after it cut its key rate to 0.5%. (WSJ)

The average home price in 100 of China’s largest cities moved up by the higher rate in a year-and-a-half. (WSJ)

International Business Machines Corp. (NYSE: IBM) discussions with Lenovo about selling its server division fail. (WSJ)

Market share improvement in North America, Asia and Europe push General Motors Co. (NYSE: GM) shares higher. (WSJ)

A slew of regulatory issues badly damage J.P. Morgan & Co.’s (NYSE: JPM) role as the premier bank in the United States. (NYT)

Michael Bloomberg’s positive comments about the Financial Times cause more speculation he might buy it. (NYT)

Commercial mortgage trading by Fannie Mae and Freddie Mac comes under scrutiny. (FT)

Siemens A.G. (NYSE: SI) cuts its forecast, which may pressure its CEO to leave. (Bloomberg)

Shoe company Adidas posts record profits. (Bloomberg)

In its filing, the firm reported:

Pursuant to Rule 477 promulgated under the Securities Act of 1933, Toys “R” Us, Inc. hereby applies for the immediate withdrawal of the above-referenced Registration Statement, which was originally filed with the Securities and Exchange Commission on May 28, 2010, as amended on July 9, 2010, August 16, 2010, October 1, 2010, March 28, 2011 and June 30, 2011, together with all exhibits thereto.

The Registration Statement was filed in connection with the proposed initial public offering by Toys “R” Us, Inc. of its common stock, which Toys “R” Us, Inc. has determined not to pursue at this time. Toys “R” Us, Inc. confirms that it has not sold any securities pursuant to the Registration Statement.

Toys “R” Us, Inc. requests that, in accordance with Rule 457(p) promulgated under the Securities Act, all fees paid to the Securities and Exchange Commission in connection with the filing of the Registration Statement be credited for future use.

Just a few years ago, the common themes were out-of-control finances and out-of-control corporate leadership with no accountability to shareholders (nor to any moral hazards). The pendulum has now swung the other way, and perhaps it is starting to swing too far. Perhaps. Now anyone with access to millions of dollars or billions of dollars can aggressively go after a company for corporate governance issues. This can be over executive compensation, how a company should be capitalized, what forms of stock it should have, what terms it should have for a merger, whether it should split the roles of CEO and chairman, anti-takeover provisions, retirement compensation and on and on.

If you begged us to guess whether activism will grow or contract, we would think that activism will continue. Does that mean that there is not a risk nor that this is a bubble that will not burst and end badly for the public? Those are complicated issues and it may be quite some time before we know the answer. What is so interesting here is that the activist world very recently has targeted what may be hundreds of billions dollars worth of companies.

There are many instances where we cannot help but wonder if an activist bubble is helping to bolster many stocks. For starters, activists can often drive up a stock and create wonderful value. Sometimes they can get out of control, and sometimes they can go out and create absolute value destruction. The saying “there is no free lunch” is one that cannot be ignored, even by activists.

One big activist dilemma is General Electric Co. (NYSE: GE). GE is so large that forcing change is hard to do, but calls have been made over and over to break up the conglomerate’s empire. The problem is that weak units during one part of the business cycle act as cover for the other units when the business cycle changes. An activist might have said that GE needed to not cut its dividend during the recession, but this freed up enough capital that it probably saved quite literally tens of thousands of jobs at GE in the recession. Others have called for new leadership other than Jeff Immelt, while Immelt’s greatest blunders may simply have been that he took over after Jack Welch, when GE was trading close to 30 times earnings, and Immelt’s first day as CEO was quite literally a few days before the September 11, 2001 terrorist attacks.

A few powerful men with many financial backers behind them have gone after some really big companies. Again, this train is moving what is nothing short of hundreds of billions of dollars worth of companies. What you have not seen is why this may be a bubble. There is a serious risk in driving shareholder value in the short-term. Anyone can go in and propose layoffs, a spin-off, a recapitalization, a change in management and the like. The problem is that this effort can gut a company or it can merely be a win during one part of the business cycle.

Many efforts can be taken to unlock shareholder value. Special dividends can be issued. Debt can be taken on to pay a dividend or to buy back shares. Companies can go out and seek strategic alternatives. Companies can make their boards easy to change or they can get rid of any barriers that might lead to takeovers. There are dozens of more things they can do. The question to ask is whether creating short-term value comes at the cost of adding too much long-term risk. These risks are potentially serious issues that investors chasing activists have to consider.

Apple Inc. (NASDAQ: AAPL) has fallen out of favor and is actually getting less coverage now that so much media attention was given to the spending sequestration dilemma in Washington, D.C. Apple shares hit a new 52-week low on Friday And the stock briefly traded under $430. The $1 billion Samsung judgment has been cut by $450 million on Friday. Apple’s share price is getting closer and closer to what portfolio manager Jeffrey Gundlach had been forecasting as a reversion price. The real question that investors will have on Monday and the rest of the week is whether or not anyone starts to care again.

Barnes & Noble Inc. (NYSE: BKS) is still in trouble if it stays on its own but new interest from founder Riggio has shares back up again. Barron’s reported over the weekend that Riggio should pay at least $19 per share for the retail unit. The report even gave B&N a combined value for the bookstores and the Nook operations at more than $38 per share.

Berkshire Hathaway Inc. (NYSE: BRK-A) released its annual earnings for 2012 and Warren Buffett released his annual letter to shareholders on Friday. While shares have outperformed other conglomerates in 2012, investors may start to look at that premium over book value compared with this year’s strong performance. Buffett’s stock is also trading up virtually at all-time highs.

Bristol-Myers Squibb Co. (NYSE: BMY) will be in focus on Monday, as will Biogen Idec Inc. (NASDAQ: BIIB) and Shire PLC (NASDAQ: SHPG), after late-Friday news that the $60 billion Big Pharma stock considered these and is considering other companies for large acquisitions. While Biogen hit a new all-time high on the pop, Shire actually rose more as the company may be more acquirable and would be cheaper on a raw dollar basis and is currently cheaper on its relative earnings multiples to buy.

Depomed Inc. (NASDAQ: DEPO) will be on watch as it has an FDA panel meeting regarding its menopause drug, and there appears to be a coin-toss over whether or not this will be a win or loss. Expect shares to be halted all day Monday.

Forestar Group Inc. (NYSE: FOR) was highlighted in Barron’s as “rich assets, cheap shares” for its real estate, energy, water and timberland assets with shares trading at a whopping 40 percent discount to its net asset value. For whatever it is worth, its consensus analyst price target is $25.67 versus the closing price of $17.56. Investors also need to know that the small cap Forestar pays no dividend currently and that its market cap is a mere $605 million.

Intuitive Surgical Inc. (NASDAQ: ISRG) is becoming a battleground stock and the debate goes on. Bill Alpert of Barron’s warned this weekend that despite shares recovering on Friday after FDA questions on Thursday, the high price shares may not see much of an increase. The rain on Friday was over 8%, but that still did not recover all of Thursday’s losses.

Nymox Pharmaceutical Corp. (NASDAQ: NYMX) saw shares tank to a new 52-week low on Friday and the stock was halted after a circuit-breaker was triggered. The company said that no news or material information was out there, but the stock still closed down 8.75% at $5.32 on the day. Unfortunately, Nymox with its $177 million market cap has no real analyst following at all and that means that no one can pound the table in its defense on Monday.

Palo Alto Networks Inc. (NYSE: PANW) was pumped up in Barron’s this weekend as a cyber security player that is winning with the well documented cyberattacks. While the article said that the stock was trading at a whopping 137 times next year’s earnings, the article also said that Palo Alto has no debt and almost 5 dollars a share in cash it also gave a price target of $72 from one other analyst.

Peabody Energy Corp. (NYSE: BTU) was listed in the Barron’s Commodities Corner over the weekend as a winner for a turnaround in coal, with some caution remaining of course about the coal sector. The company was the best mentioned name of the lot and also as the largest publicly traded coal company that is uniquely situated to serve demand that is still growing from Asia. After a 4.6% drop to $20.56 on Friday, its 52-week range is $18.78 to $33.78 and analysts according to the Thomson Reuters consensus still appear to have a price target north of $32 here.

TransCanada Corp. (NYSE: TRP) is edging closer to approval of the keystone pipeline if the State Department report helps sway the Obama administration with its report that the pipeline will not harm the environment.

Here are Friday’s top analyst upgrades and downgrades from Wall Street research calls.

Groupon Inc. (NASDAQ: GRPN) fires its CEO after poor financial performance. (Reuters)

Americans added to household debt last year for the first time since the recession. (WSJ)

Best Buy Co. Inc. (NYSE: BBY) ends discussions with its founder about a possible buyout. (WSJ)

Apple Inc. (NASDAQ: AAPL) executives must own stock worth three times their base salaries. (WSJ)

Sales of the Barnes & Noble Inc.’s (NYSE: BKS) Nook fall sharply. (WSJ)

Investors criticize the pay package of Walt Disney Co. (NYSE: DIS) CEO Bob Iger, along with the fact that he is both chairman and chief executive officer. (WSJ)

Facebook Inc. (NASDAQ: FB) buys digital-advertising service Atlas from Microsoft Corp. (NASDAQ: MSFT). (WSJ)

Boeing Co. (NYSE: BA) cuts workers who are part of the 787 Dreamliner program as sales stop because of problems with the plane. (WSJ)

Carl Icahn gets too two seats on the Herbalife Ltd. (NYSE: HLF) board. (NYT)

Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-B) annual shareholder letter may indicate what he plans to do with the company’s $48 billion in cash. (FT)

The U.S. dollar index rose 0.38% today, now at 81.906. The GSCI commodity index is down 0.8% at 650.13, with commodities prices mostly higher today. WTI crude oil closed down 0.8% today, at $92.05 a barrel, losing 5.6% on the month (more coverage here). Brent crude trades down 0.7% at $111.10 a barrel. Natural gas is up about 1.3% today at about $3.48 per million BTUs following the weekly storage report (more coverage here). Gold settled down 1.1% today at $1,578.10 an ounce, down about 5% for the month of February.

The unofficial closing bells put the DJIA down about 21 points to 14,054.25 (-0.15%), the NASDAQ fell about 2 points (-0.07%) to 3,160.19, and the S&P 500 fell -0.09% or more than 1 point to 1,514.56.

There were a several analyst upgrades and downgrades today, including eBay Inc. (NASDAQ: EBAY) started as ‘outperform’ at BMO; Red Hat Inc. (NYSE: RHT) started as ‘overweight’ at Barclays; Saks Inc. (NYSE: SKS) cut to ‘underweight’ at Morgan Stanley; First Solar Inc. (NASDAQ: FSLR) reiterated as ‘hold’ at Argus; and VMware Inc. (NYSE: VMW) started as ‘hold’ at Stifel Nicolaus.

Earnings reports since markets closed last night resulted in several price moves today, including these: Career Education Corp. (NASDAQ: CECO) is down 9% at $3.25; Continental Resources Inc. (NYSE: CLR) is up 4.7% at $87.88; GT Advanced Technologies Inc. (NASDAQ: GTAT) is down 6.5% at $2.87; Limited Brands Inc. (NYSE: LTD) is up 2.7% at $45.72; Monster Beverage Corp. (NASDAQ: MNST) is up 3.3% at $51.27; Sturm Ruger & Co. Inc. (NYSE: RGR) is up 2.6% at $54.89 (more coverage here); Universal Display Corp. (NASDAQ: PANL) is up 13.5% at $31.67; Barnes & Noble Inc. (NYSE: BKS) is up 4.5% at $15.92; Cablevision Systems Corp. (NYSE: CVC) is down 9.1% at $14.06; Kohl’s Corp. (NYSE: KSS) is down 1.1% at $46.10; and Sears Holdings Corp. (NASDAQ: SHLD) is down 6.2% at $44.52 (more coverage here).

After markets close today and before they open tomorrow morning we are scheduled to hear from Body Central Corp. (NASDAQ: BODY), Cell Therapeutics Inc. (NASDAQ: CTIC), Clean Energy Fuels Corp. (NASDAQ: CLNE), Deckers Outdoor Corp. (NASDAQ: DECK), Gap Inc. (NYSE: GPS), Molycorp Inc. (NYSE: MCP), Palo Alto Networks Inc. (NYSE: PANW), and SandRidge Energy Co. (NYSE: SD).

Best Buy Co. Inc. (NYSE: BBY) was scheduled to report after closing today, but announced a delay until tomorrow, ahead of tonight’s deadline to receive an offer from founder Richard Schulze (more coverage here).

Some standouts from today include the following stocks:

Groupon Inc. (NASDAQ: GRPN) is down 24.3% at $4.53. The daily deals web site absolutely cratered on a dismal earnings report last night. More coverage here.

J.C. Penney Co. Inc. (NYSE: JCP) is down 18% at $17.34. The department store operator posted results that were even worse than Groupon’s. More coverage here.

Broadsoft Inc. (NASDAQ: BSFT) is down 30.8% at $21.39. The Internet communications company posted good earnings last night, but guidance was way below expectations.

Stay tuned for Friday. Fed Chairman Ben Bernanke is giving a speech. Automakers will be announcing February car sales throughout the day.We have also noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – Personal income and outlays
• 8:58 a.m. – PMI manufacturing index
• 9:55 a.m. – University of Michigan/Thomson Reuters consumer sentiment index
• 10:00 a.m. – Institute for Supply Management manufacturing index
• 10:00 a.m. – Construction spending