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Amazon to take over Borders Group's online bookselling operations

Posted: Thursday, April 12, 2001

NEW YORK (AP) -- Borders Group Inc., the nation's second-largest book retailer, is abandoning its money-losing online business and turning it over to Amazon.com Inc. as part of a new partnership between the two companies.

A new Borders.com Web site, bearing the Amazon as well as the Borders brand, will launch in August, the companies announced Wednesday.

Amazon.com will become the seller of record, providing inventory, fulfillment and content and customer service. Amazon.com's Web site will continue to operate independently.

Borders will eliminate all 70 jobs in its Borders.com operation but will seek other posts for those workers, said Greg Josefowicz, president and chief executive officer of the retailer based in Ann Arbor, Mich.

Both companies declined to comment on specific terms of the agreement, but Borders officials said that it would be making an undisclosed one-time payment to Amazon.com. Borders will also share a percentage of the revenue with Amazon, though officials said no stock exchange is involved.

The alliance could be a savior for Borders, which has struggled with its e-commerce business since it was launched in 1998, three years after Amazon.com and one year after Barnes & Noble.com debuted.

''This allows Borders to maintain a presence on the Web without having to spend a lot of money,'' said Jeffrey Fieler, an analyst at Bear Stearns.

Wall Street analysts said the alliance would have modest financial impact on Amazon.

According to analysts, Amazon has been looking to forge an alliance similar to the one it struck with Toys R Us last year. Amazon took over the toy retailer's online operations while Toys R Us continued to handle the merchandising.

The Seattle-based Amazon has reportedly been in talks with various other retailers, including Best Buy Inc., the nation's largest electronics retailer, and Wal-Mart Stores.

Jeff Bezos, Amazon's chief executive, declined to discuss that during an interview with The Associated Press, saying only: ''We would like to have more partnerships.''

Shares of Amazon were up 89 cents to $12.90 in trading Wednesday on the Nasdaq Stock Market. Shares of Borders were down 38 cents to $16.60 on the New York Stock Exchange.

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On the Net:

http://www.amazon.com

http://www.borders.com



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