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To: stockman_scott who wrote (142192)	5/6/2002 11:57:03 PM
From: H James Morris	Respond to of 164684

Yeah, I know. Melinda must have confidence since she has been on the board since its inception. Message 17429238

To: stockman_scott who wrote (142192)	5/7/2002 12:17:30 PM
From: H James Morris	Respond to of 164684

>>Rite Aid Corp. has sold off its 14 percent stake in drugstore.com to a group of investors that includes board member Melinda Gates, Maveron Equity Partners and Kleiner Perkins Caufield & Byers. Shares of Bellevue-based drugstore.com surged 26 percent on the news, rising 54 cents to close at $2.64. Gates, who joined the drugstore.com board in 1999, is the wife of Microsoft Corp. co-founder and Chairman Bill Gates. Maveron is a Seattle venture capital firm formed by Starbucks Corp. Chairman Howard Schultz and former investment banker Dan Levitan. Kleiner Perkins is a Silicon Valley venture capital firm. Rite Aid invested $7.6 million in drugstore.com in June 1999, one month before the online pharmacy debuted on Nasdaq with a $90 million initial public offering. A month after the IPO, Rite Aid's stake was worth more than $500 million. But in the past 2 1/2 years, the value of the investment has plummeted. Yesterday's sale of 6.8 million shares, combined with sales from last week and January, brought Rite Aid a little more than $20 million. The stock sale does not affect the 10-year strategic agreement between drugstore.com and Rite Aid, signed in 1999. That agreement calls for drugstore.com to be the exclusive online pharmacy for Rite Aid. It also allows drugstore.com customers to pick up prescriptions at 3,500 Rite Aid stores. Rite Aid, one of the largest pharmacy chains in the country with annual sales of more than $15 billion, sold the stock after the management team decided it no longer wanted to hold outside investments. "Our focus is to run our drugstore company, not holding or making other investments," Rite Aid spokeswoman Karen Rugen said. It has no other outside investments, she said. The stock sale, Rugen said, does not indicate a lack of enthusiasm for online drugstores, a sector that has been hit hard in the past two years as well-financed start-ups struggled to find money-making business models. "We have customers who really like to use the Internet, both to buy products and buy prescriptions," Rugen said. "With the drugstore.com investment, we were able to make a minimal investment compared to some other companies that went out and set up their own Web site and their own Internet venture. ... It was a good match. They are a good partner." Amazon.com, the largest stakeholder in drugstore.com, and Vulcan Ventures, a venture capital firm controlled by Microsoft co-founder Paul Allen that also has a minority stake in the company, did not participate in the stock purchase. Drugstore.com Chief Financial Officer Bob Barton said he was pleased with the outcome. "We are getting a significant amount of support from some great partners of ours who have been on our board: Melinda, Maveron and the folks at Kleiner Perkins," he said. "This is a nice show of confidence from them." Even though Rite Aid no longer holds an ownership stake in the company, Barton said he thinks it will have little effect on the 10-year agreement between the two companies. About 25 percent to 30 percent of drugstore.com's sales come through the Rite Aid partnership, Barton said. Drugstore.com also recently expanded its relationship with the pharmacy chain to sell private-label vitamins, sunscreens and other Rite Aid products on the Web site. seattlepi.nwsource.com