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MSFT, RadioShack in deal
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November 11, 1999: 3:10 p.m. ET
Software firm to promote Internet services in 7,000 U.S. retail outlets
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NEW YORK (CNNfn) - Microsoft Corp. Thursday signed a five-year agreement to create a "store within a store" in up to 7,000 RadioShack U.S. retail outlets in an effort to add subscribers to the software firm's Internet service.
RadioShack, the retail arm of Tandy Corp. (TAN) will provide demonstrations of and offer subscriptions to Microsoft 's (MSFT) MSN Internet service. As part of the deal, Microsoft will make a $100 million equity investment in the newly launched RadioShack.com to help build its e-commerce offerings.
The move is an attempt by Microsoft to boost subscribers to its MSN Internet service. MSN's 2 million subscribers lag far behind America Online Inc. 's (AOL) 19 million. EarthLink Network Inc. (ELNK), which agreed in September to merge with MindSpring Enterprises Inc. (MSPG), will rank second with 3 million subscribers upon completion of the deal, followed by MSN.
Along with showcasing both dial-up and broadband MSN services, RadioShack will install MSN in customers' homes.
"This is a big deal for us," Steve Ballmer, Microsoft's president, told CNNfn. "The chance to have the kind of partnership where a customer can go in, experience the Internet, sign up and get the Internet easily installed in whatever form makes sense."
As part of the alliance, RadioShack.com will hold a premier placement across all of MSN and its properties.
In addition to MSN, the Microsoft store within RadioShack will showcase WebTV network services and Windows CE-based hand-held devices.
Leonard Roberts, chief executive officer of Tandy and RadioShack, told CNNfn the agreement should provide the company with $250 million in recurring revenue by 2004. Tandy currently reaps about $60 million a year in recurring revenue by signing up customers for Internet services.
The first Microsoft stores are scheduled to begin appearing in RadioShack outlets in the third quarter of 2000.
Microsoft shares rose 2-5/16 to 89-7/16 in afternoon trade. Tandy shares jumped 4-9/16 to 69-3/4.
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