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AOL to offload struggling Bebo

Social-networking site cost $850m two years ago

AOL is actively trying to rid itself of Bebo, the social-networking site it acquired two years ago for a whopping $850 million.

Among the alternatives AOL is contemplating are to sell Bebo or shut it down this year, according to company spokeswoman Tricia Primrose.

AOL shared the news with its employees on Tuesday via an internal memo, in which it said that the social-networking market is "heavy with competition" where scale is key to 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," reads the memo.

Facebook is the world's most popular social networking site with 462.7 million unique visitors in February, up 68 percent from a year earlier, according to comScore. By contrast, Bebo, in sixth place, had only 12.8 million unique visitors in February, down 45 percent.

AOL expects to make a definitive decision regarding Bebo by next month, Primrose said.

At the time it acquired Bebo in March 2008, AOL was led by CEO Randy Falco, who later lost his job and was replaced by former Google executive Tim Armstrong in March 2009.

Under Armstrong, AOL is pursuing a strategy based primarily on becoming a large provider of original content. AOL is beta testing Seed.com, a content management system where writers, photographers and videographers can find freelance assignments the company wants covered.

AOL also acquired 'hyper local' news provider Patch Media Corporation, which offers local town news, and Going, an event city guide.

In December, AOL was spun off as an independent company from corporate parent Time Warner and set in motion a process to cut about a third of its global staff of about 6,900 employees.


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