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Borders hands online operations to Amazon

The bookseller plans to cut its Web staff as the e-tail heavyweight takes over inventory and fulfillment for a new, co-branded Web site.

Amazon.com on Wednesday said that it has linked arms with bookseller Borders Group to launch a new co-branded Web site that would leave inventory and fulfillment in Amazon's hands.

BorderAmazon As previously reported, the deal marks the second time that Amazon has teamed with an offline retailer. Last year, Amazon took over the fulfillment and Web operations for the online store of Toys "R" Us.

Under its agreement with Borders, also a national chain with an online retail site, Amazon intends to relaunch Borders.com as a co-branded Web site, with the e-tailer handling customer service, fulfillment and inventory. The co-branded site is slated to debut in August.

"The goal here is to provide an even better customer experience," Jeff Bezos, Amazon's CEO, said in a conference call Wednesday morning.

Borders.com's approximately 70 employees will eventually be let go, Borders CEO Greg Josefowicz said during the call. The company will work with them to find alternative positions and will offer severance packages, he said.

Financial details of the deal were not disclosed.

Amazon's shares rose 94 cents, or about 8 percent, to $12.95 in early trading Wednesday. Borders inched up 27 cents to $17.25.

The deal comes two days after Amazon acknowledged that its books, music and video businesses have seen growth go flat even as its overall first-quarter results beat Wall Street's expectations. Analysts and investors have been fretting about the company's business model and working capital.

The new site will offer content unique to Borders.com, including store location information and in-store event calendars.

Both companies said they intend to work together to produce additional offerings, which may include the ability for customers to reserve a title over the Web for later purchase and pickup at a local Borders store, as well as an extension of the the alliance internationally. In addition, customers of the co-branded site, as well as Amazon's large pool of customers, may receive notification of events such as celebrity-author appearances and musical performances scheduled to take place in their local Borders stores.

The co-branded site will feature the wide selection of books, music, video and DVDs available at Amazon?s site. The Amazon e-tailing site will continue to operate independently.

The existing Borders.com site will continue to operate until the launch of the co-branded site. The companies said that their agreement does not affect previously issued financial outlooks for either company.