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Borders.com forms alliance with Amazon.com

Old 04-11-01, 10:58 AM
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UPDATE 1-Amazon, Borders to relaunch Borders.com
April 11, 2001


(adds details throughout, company comment)

NEW YORK (Reuters) - No. 1 Internet retailer Amazon.com Inc. and Borders Group Inc.,
the second-largest U.S. bookseller, said Wednesday they struck an agreement to revamp
and relaunch Borders' money-losing e-commerce site.

Financial terms of the deal were not disclosed, and the companies said it would have no
impact on financial guidance previously issued by either company.

In a New York press conference following the announcement, Borders' Chief Executive
Greg Josefowicz said the company would cut all of the 70 jobs at Borders.com operations
as a result of the deal with Amazon.com.

Josefowicz said the company plans to look for new positions within Borders Group for those
workers who were laid off as a result of the deal.

The relaunched site, expected to make its debut in August, will feature Amazon.com's books
and music offerings, including compact music discs, videos and DVDs, the companies said.
Amazon.com's Web site will continue to operate independently.

The deal mirrors one that Amazon struck with U.S. toy retailer Toys R Us Inc. last year. It
not only boosted the toy seller's weak online presence but also won praise from industry
watchers who were concerned about Amazon's ability to succeed in new product areas.

Although neither Borders nor Amazon changed their financial guidance following the deal,
Josefowicz did say the deal would likely contribute to the company's previously announced
20 percent earnings growth guidance given earlier this year.

The two companies today did not address the prospect of customer overlap between
Amazon.com's books and music business and the new co-branded Borders.com site.
Borders did say, however, that it planned to report Borders and Borders.com earnings
together in the future.

As part of the agreement, Amazon will provide inventory, fulfillment, site content and
customer service for the site, which will still offer content unique to Borders.com, including
store location information and in-store event calendars.

``This alliance allows Borders to offer our customers the convenience of an online shopping
option with the added benefits that will emerge through our new association with
Amazon.com, the world's recognized e-commerce leader,'' Josefowicz said in a statement.

In March, Borders said its fourth-quarter profits fell 48 percent and said that along with
seeking out new partnerships for its online operations it expected losses from the Internet
business narrowing to about 15 cents a share for the 12 months to January 2002, reaching
$1.38 to $1.40 a share.


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