By Chris Coyle
May 11, 2000

Office supply seller Office Depot (NYSE: ODP) and interactive services company America Online (NYSE: AOL) today announced a 5-year stragegic alliance valued at $44 million dollars. The marketing deal has been created to help small businesses and their owners.

Under the agreement, the two companies will develop a small business website which will be intergrated into the Business section of the Netscape Netcenter website. This website will contain business programming and content as well as an e-commerce section for customers to buy office supplies and other products. The site will incorporate non-exclusive technology from AOL, including the "quick checkout" tool, which allows customers to type in personal and purchasing information only once. Consumers will not have to re-enter all of his or her information every time they purchase something.

Also under the agreement, Office Depot will feature America Online through its sales channels. This includes the 836 retail stores Office Depot operates around the country. AOL will be featured on all the computers Office Depot carries in its stores. Office Depot will also offer customers AOL software and registration in its stores. They will also promote AOL through its advertising and website.

Finally, America Online will feature Office Depot products through its shopping and B2B (Business-to-Business) areas. Some of the brands Office Depot will be featured in are AOL, AOL.COM, Digital City, CompuServe, and Netcenter.

Chairman and CEO of Office Depot, David Fuente said, "Through this strategic alliance with America Online, we hope that our depth of services and products will bring new benefits to business users and consumers across the highly successful AOL, AOL.COM, and Netscape brands."

AOL's President and COO, Bob Pittman, also commented on the agreement by saying, "We are always looking for new ways to provide our members with the resources to make their everyday lives easier, and our agreement with Office Depot will provide millions of small businesses with streamlined access to the tools and resources they need to remain competitive, while offering all consumers a broad array of office supplies, furniture and more.''

The deal appears to be a good one for both companies: Office Depot will gain a stronger internet presence while AOL will gain valuable marketing among various Office Depot channels.

The market, however, seemed unimpressed with the deal. AOL finished up a measley 1/4 point to 53 15/16 on volume well below its average. Office Depot also finished the session up 1/4 to 10 7/8 on volume well below normal.

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