03/28/2008 05:12 am ET Updated May 25, 2011

AOL-Bebo: An Analysis

Key points on AOL-Bebo (TWX):

*Price probably fine. Social networks very hard to monetize, but given per-member price deflation since Murdoch bought MySpace, $850 million doesn't seem egregious. Certainly not a steal, either, though: Bebo has reportedly been on block for at least a month, and we assume there were other bidders.

*Bebo financials reported by Kara Swisher suggest AOL purchase price is about 7X 2009 revenue and 15X EBITDA.

*Bebo will not help AOL much in the US, which is where most of AOL's current user base is). The US is a two-horse social-network game, with one fast growing No. 2 (Facebook) and a stagnant No. 1 (MySpace). Unfortunately, you get few points for third place.

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