AOL Dumps $1.2 Billion Worth of Acquisitions

destinyland writes "The social networking site Bebo is being sold for just 'a small fraction of the $850 million AOL paid for the site two years ago,' according to the Wall Street Journal. Since its acquisition, 'the site has been shedding users as fast as Facebook and Twitter have been gaining them,' according to one industry observer, quoting an April memo reportedly sent by an AOL executive arguing that Bebo 'has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space.' Bebo's traffic is already down 44% from last year, according to the Wall Street Journal, attracting just 5 million unique US visitors in May (versus 130.4 million for Facebook). And earlier this month, AOL shed the instant messaging service ICQ for $187.5 million — which it had acquired in 1998 for over $408 million."

Comments

Come and go.

[cosm]

Web trends come and go. Much of the time, it is just a roll of the dice on the company's part as to which "trendy" startup they decide to buy. Hell, perhaps "Facebook" was just easier to say/read/pronounce for todays high-school drones, so it became popular. Or perhaps it was i'ts (once) simplistic interface and (semi) useful purpose. Or perhaps the flying spaghetti-monster decided to cut the strings. Either way, nothing new under the sun, and the lesson to be learned from here is that if you gamble on fluctuating trends and fads, there is always an inherent risk to be understood.

And plus, if your company spams the world with digital coasters for a decade, well, your really screwed.

The leaders, in losing money.

[tivoKlr]

AOL & Time Warner. AOL & Bebo. AOL and & ICQ. Gosh what's next...AOL and GM?

Wanna lose money? Follow AOL's lead...how is it that this company exists anymore?

Re:The leaders, in losing money.

[tehcyder]

As the saying goes, the only way to make a million dollars from AOL is to start off with ten million.

AOL needs to be stopped

[troubbble]

AOL just shouldn't be allowed to acquire anything from now on. They seem to ruin everything they touch.

Re:AOL needs to be stopped

[trytoguess]

AOL runs sites like Engadget, Joystiq, wow.com, autoblog, etc. They seemed to have been trying to rebrand themselves as a nerdy information hub for quite some time.

Re:AOL needs to be stopped

[Buzzsaw5]

They seem to ruin everything they touch.

Hopefully they'll acquire the Yankees next.

Re:AOL needs to be stopped

[Trepidity]

Well, they had a huge installed base, and while it's been declining since 2002, it's from a large peak and not all that high a slope. That's provided a ton of revenue over the years to let them survive these unsuccessful forays into other businesses.

They still have about 5 million paying subscribers. And they've actually increased the profitability per-subscriber compared to their heyday, because while in the late 90s / early 2000s they sold them dialup access (and had to maintain modems/etc.), these days they're mostly selling an add-on service on top of broadband internet access that customers get elsewhere. People for years would pay $10/mo basically to keep their email address that they'd had for years, or the software they were used to using (a lot of AOL users aren't that tech-savvy). Now you can actually get the software and email/etc. free, but you have to go click on something to request a transition to the free service (which is identical but w/o tech support), so several million people are totally voluntarily paying AOL $120/yr, for a service that also makes a good amount of money by showing them ads.

Re:AOL needs to be stopped

[DrXym]

AOL are like King Midas except everything they touch turns to shit. Netscape, CompuServe, Mapquest, Bebo et al. They buy these companies for their innovation and technology which they promptly smother until it is dead. AOL is conservative, risk averse, marketing driven company and inflicting that culture on acquisitions negates the reasons for buying them out in the first place.

Re:AOL Is Bad At This

[Brett Buck]

I think it's worse than that. Once a company gets associated with AOL, it's reputation goes into the swirling porcelain bowl. If they acquires the companies but didn't tell anybody, they would be far better off. Even my elderly mom and dad know that AOL is intrinsically lame.

      Brett

About half of that is in 30-Day Trial CD-ROMS.

[Anonymous Coward]

BP has shown interest in using them to plug the hole.

Re:AOL Is Bad At This

[khallow]

I never understood the bad reputation that AOL has. They are a great charity.

*bing*

[Anonymous Coward]

You've got fail!

Remember they bought Netscape

[Gregg M]

Remember they bought Netscape for 4 BILLION! Then they did nothing with it ... nothing! They could have rebuilt AOL to work in the Netscape browser. The way all of Google works today. Overnight Netscape would have gained 40% market share. Even just the Netscape homepage could have brought in some money.

Selling ICQ? Really?

[Etcetera]

This actually kind of surprises me... From what I understand, ICQ is still a big player internationally in the instant-messaging space. Unless Skype is suddenly ruling the roost or something... And despite my qualms with some of their updates over the years (Newsflash: When you have to put out a "Lite" version of your software because your users refuse to use the bloated piece of crapware that your official client is, you're doing something wrong...) ICQ has done nothing if not tried to remain relevant, added features, tried to integrate with other systems.

ICQ seems like one of the pieces of tech to keep... and not just for nostalgia reasons.

ICQ #5632973

Re:Selling ICQ? Really?

[captainpanic]

Agreed. ICQ is nice technology. I certainly prefer it to MSN.

However (this is a big "however"), the quality of social software is NOT its most important feature. The most important feature is popularity. And MSN and Skype are simply more popular. Unless that decrease in popularity is reversed, the ICQ ship is sinking. It may sink slowly, but it's inevitably sinking.
It may be a wise decision to sell it for about 200 million. Another company that is better at marketing may now attempt to either find a niche for ICQ, or to turn mainstream chat focus back to ICQ. It's got a catchy name already, it could work.

I never really understood why people preferred MSN over ICQ.

Here is how they erased it from entire .TR

[Ilgaz]

Now, here is a very unknown and interesting thing. Turkey is also 16th country with largest online population. I also heard it is 5th largest user of Facebook.

ICQ was the de-facto messaging standard here and AOL genius management/admins, instead of fixing their systems with basic bayesian filtering/speed triggers/spam reporting, blocked the ENTIRE country IP block from accessing the servers. For couple of months, people played around with proxies, open proxies resulting in a way bigger issue as some of those open proxies are actually nice honeypots for passwords operated by bad guys acting like stupid.

Soon, people stared to their desktop and they have seen they actually have another instant messenger pre-installed by MS (windows messenger) which they previously joked as it is like stone age compared to features ICQ offers. All launched it regardless of how backwards it is and let me tell you what happened now: 35 million Microsoft messenger/live _active_ users in Turkey. That number is so high that, MS had to double check their statistics system. Today, you can even get Live messenger IDs of small grocery shops in villages to order stuff "online".

I still run ICQ on my handheld etc. and guess what? Weeks after Russian acquisition, ICQ spam problem is down from daily/hourly to weekly. So, it could be fixed...

It is not like AIM had any existence in Turkey so, "conspiracy to kill ICQ" is not valid. Unfortunate thing is, MS "Live", that backwards thing became the king because of them.