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AOL, Wal-Mart in Net pact
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December 16, 1999: 8:44 a.m. ET
Companies to offer retailer’s customers low-cost Internet access
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NEW YORK (CNNfn) - Wal-Mart Stores Inc. and America Online Inc. unveiled an Internet service alliance Thursday that will provide customers of the world’s largest retailer with low-cost Internet access.
The agreement forges a new co-branded Internet service provider (ISP) and various marketing initiatives between the companies.
Rumors of an alliance sent the companies’ stock higher recently, and follow on the heels of Wednesday’s pairing of portal Yahoo! (YHOO) and Kmart (KM) as part of the retailer’s new Bluelight.com site.
The co-branded Wal-Mart/AOL ISP will be a customized version of the CompuServe service. It is aimed at Wal-Mart shoppers who live in rural areas and don’t have the ease of Internet access that urban dwellers enjoy.
Promotional efforts include in-store distribution of the co-branded Wal-Mart/AOL ISP and of AOL version 5.0 software that links to Wal-Mart's e-commerce site, Wal-Mart.com, which is slated to debut Jan. 1.
Wal-Mart (WMT) also plans to promote the ISP as well as AOL’s interactive service in print, radio and television advertising. The Wal-Mart e-commerce site also will be available across AOL (AOL)’s various sites.
E-Commerce analyst Ken Cassar of Jupiter Communications said the union is a boon to Wal-Mart’s interactive efforts, which, so far, have been minimal.
"For Wal-Mart, this makes an awful lot of sense because they are not seen as being very tech savvy,” Cassar said. "Frankly, among the Internet community, they’re seen as a bit backward.”
Wall Street analyst Arthur Newman of Schroeder’s said the AOL/Wal-Mart marriage also makes a lot of sense for AOL.
"This is one more element in AOL’s growing distribution platform,” Newman said. "They are a mass-market brand and want to serve as much of the world as possible.
"Essentially they are creating a private-label ISP to penetrate Wal-Mart’s community, of which 40 percent don’t currently have Internet access,” Newman said.
On Wednesday, AOL closed up 13/16 to 89-5/8; in Instinet trading early Thursday, the stock rose 7/8 to 90-1/2. Wal-Mart fell 1-1/32 Wednesday to 66-1/32. 
-- from staff and wire reports
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