Bebo: The Anna Nicole-Smith factor


AOL bought Bebo today for $850 million.

Kara Swisher thinks the number is high, and without having done any analysis whatsoever, I tend to agree.

But the bigger question is, what the hell is AOL doing buying Bebo? FFS, aren't they dead yet? To me, this is the story of a has-been online brand buying the younger player. This is like when J. Howard Marshall married Anna Nicole-Smith. Not that Bebo is an ex-Playboy model or anything, but AOL feels like an 80+ year-old brand.

The problem is, under the covers, Bebo is not that hot ...

According to the several sources who were privy to Bebo’s financials, for example, Bebo’s revenues for 2006 were only $7 million with $3 million in EBITDA (earnings before interest, taxes, depreciation and amortization). In 2007, the results are still small, with $20 million in revenues and $5 million in EBITDA.

Using 2007 results, that means Time Warner’s (TWZ) AOL paid a handsome 42.5 times revenues and an incredible 160 times EBITDA.

Om also wonders why AOL would buy them. More valuation chatter is here and here. A bit on the VC money here. Here's the official press release.



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