The upside of shutting down Bebo for AOL

April 7, 2010

ArmstrongTIt might seem obvious to most observers that AOL would want to cut its losses and get out of Bebo sooner rather than later, especially after it confirmed yesterday it was evaluating strategic options for the struggling business (ie shutting it down or selling it).

AOL CEO Tim Armstrong (pictured, left) has been pretty indifferent about the fading social network’s prospects ever since he came on board last year  — though he did initially promise to hold on to it.

But Credit Suisse analyst John Blackledge points out in a client note that Bebo’s burdensome $850 million price tag at the time it was bought might serve some beneficial purpose for AOL after all:

Any sale would likely generate (far) less than the $850 million acquisition price, creating a tax loss, which could be used in the future against any capital gains (if AOL were to have any).

The other (and best) option for AOL would be to close Bebo, effectively deeming the asset as worthless and taking a loss deduction.

The second option would let AOL write off that $850 million and create a future tax benefit through a net operating loss (NOL) asset, Blackledge explains. He does, however, add the caveat that it’s not clear if the IRS would allow AOL to treat Bebo as an abandoned asset but it is exploring that option.

If Blackledge’s analysis is right, then perhaps the surprising thing is that AOL, which was spun off from Time Warner late last year, still has Bebo on its books at a $850 million valuation. One can only speculate this may be why Time Warner’s management never explicitly said it was writing down Bebo’s value when it took a $25 billion writedown charge in the first quarter of 2009 — it was looking out for the soon-to-be independent AOL.

Purely from a financial point of view, as AOL makes the tricky transition from dial-up subscription cash flows to volatile Web advertising revenue having a sizable NOL in its back pocket would be no bad thing.

(Photo: Reuters)


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Posted by Luku_Ryuk | Report as abusive

Excuse Me To Butt In Like This But Am Ragin About The Fact That Bebo Is Gettin Shut Down ..!! I Am Really Upset Because I Love Bebo!!I Can Put Up Pics ,Meet New Friends ,Play Games,Put Up Sayins,Add My Favourite Songs,Make My Top Friends,Share The Luv.Do My Smiley Emotions,The List Go Ons If Bebo Shuts Down Its Like My LIFE Shutting Down:(:( Please Dont Delete Bebo I Love It Like My Life :( Please Please PLEASE Dont Shut Down My Beloved Bebo,,!! Ill Cry The Missi Hippi River!! Its My Life I Have No Life….Witout Bebo! Wat About The Mail Im Gunna Miss The Exciting Feeling I Get Wen It Comes Up U Hav Mail:( Please Dont Delete Bebo Its My Life !!Im A Beboholic Pleaes Dont Shut It Down Please I Dont Care Wat Ur Business Ur Maikin Think IOf Tehe People Who Love It An And Have Feelings ABout It Dont Make PEOPLES LIFES MISERABLE MU LAPTOP IS THE HOLE POINT OF BEBO SO DONT SHUT IT DOWN!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!  !PLEASE:(

Posted by KateObrien201 | Report as abusive

Please dont close bebo down.
It is the best social networking site on the internet.
Nothing compares to the old faithful bebo.

Posted by LeanneAngelaa | Report as abusive

Dont shut down bebo !!

Posted by LeanneAngelaa | Report as abusive

please do not down bebo.for alot of people its their only way of communicating with others.bebo may start problems but at least people communicate.i am a bebo fan i really love bebo so if ur going to take away please let their be a site that is nearly the same as bebo.alot of people really like bebo and are sad that its nearly over.
well thanks
14 years old
new zealand

Posted by Lynie | Report as abusive

Maybe Windows will buy bebo? It would be good if they turned it into a kinda web messanger/ facebook kinda thing, I wont miss bebo, Facebook is the one for me now.

Posted by iLOVEDS | Report as abusive

How can you do this??

Bebo has not only made alot of families reunite but it’s made the world a happier place?
Sad to say, But you sure as hell have no love for other people..

Posted by DiamondRush | Report as abusive

if the A.O.L shut bebo down … im getting 500 people to sign a list…i wil pick 2 friends and my mam to show the list to the A.O.L and show them that people want bebo…so they will hav to give it back…or i can sue who is shuting bebo down…cause they have no reason to shut it down

Posted by ciarafinnie123 | Report as abusive

ew ! yiu d0nt kn0w waads eet lyk t2 haav beb0 in 0ur lyf !
yy n0t shut d0wn faacebo0k eets self .& myspaace !!
chaanqes !

Posted by Leka.Minaj | Report as abusive

Really there is no upside to shutting down bebo as it has important data that some people may have no where elseexcept bebo.

Posted by Hanner | Report as abusive

weeel ; im reaaly upset who wouldnt ireckond eets ` reaaly dumb well first of all bebo to some and ofcourse me ees our sociaal life bebo lets you interact withothrrs find new friends and familly membrrs yuo havent seen in yeaaars bebo is the smartest website ive seen so far so why throw all that hard work to waste ive nevrr seen a site so incridiblee othrr websites are just jealous i am acurate if you dellete bebo people will comit suicide because like i said eets most peoples sociall life thats all iqot to saay dum as mothrrr f****krrs who ees delletinqq eet

Posted by privaate | Report as abusive

Notice that the Bebo lovers can’t spell or use correct grammar? Shut it down, it’s a useless site nowadays, it was good before AOL took over, alot more user friendly, less spam, less fake profiles. But now Facebook & Twitter have taken over, no need for more than a couple social networking sites.

Posted by nismove | Report as abusive

BEBO has its own unique style of creating profile skin layouts, changing modules, having polls, quizzes, playlists, groups, widgets, photo albums.. so many diferent things to personalise ur own profile that tells who you are, unlike the famous facebook! ive had bebo since 2005, i love bebo. but eversince AOL bought bebo, they have dug up a pit and dragged bebo to it and now tryin to dump it!! it’s AOL’s fault for makin alota huge changes and stuffing up bebo, it’s AOL’s fault for not listening but ignoring beboers who use it and so it’s us who knows best.. it’s no wonder why us beboers move to facebook, bcoz of the fault of AOL! …

Posted by Lienni | Report as abusive