Why Does AOL Want To Sell Bebo?

Posted Apr 8, 2010

AOL, Inc. (NYSE:AOL) EVP Jon Brod sent over a memo to employees regarding the reason why the company is interested in shutting down Bebo. The core reason is that Bebo is a business that has been declining and it would require too much of an investment in an effort to compete. Below if the full memo [BusinessInsider]:

In an annual filing for Bebo we will make tomorrow, AOL will indicate that it is currently evaluating strategic alternatives, which could include a sale or shut down of Bebo in 2010.
Obviously this is significant news – particularly for the Bebo team, which has done a great job remaining committed to Bebo?s users and overall business. However, AOL?s strategy has evolved driven by the fact that we are in a turnaround and that we need to get the company as focused as possible.
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.