AOL May Sell or Shut Down Social Networking Site Bebo

bebo logo
bebo logo

Just two years after buying social networking site Bebo for $850 million, AOL (AOL), the parent company of DailyFinance, is preparing to get rid of it, either through a sale or an outright closure.

Jon Brod, executive vice president of AOL Ventures, notified employees in a memo today that the company is "not in a position at this time to further fund and support Bebo," which has seen its user base shrink in recent months, and which has never come close to challenging Facebook or MySpace for supremacy.

While officially AOL is "evaluating strategic alternatives," there's reason to think the one it will arrive at is a shutdown of the site rather than a sale at what would certainly be a sale at a heavy loss. TechCrunch recently looked into the matter and laid out the tax advantages of simply killing Bebo versus offloading it to a buyer.

Here's more from Brod's memo:

The strategy we set in May 2009 leverages our core strengths and scale in quality content, premium advertising and consumer applications, positioning us for the next phase of growth of the Internet. As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success. Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing
a turnaround in social networking.

AOL is committed to working quickly to determine if there are any interested parties for Bebo and the company's current expectation is to complete our strategic evaluation by the end of May 2010.

The news comes as AOL is reportedly also weighing offers for its ICQ instant messaging service.