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Valleywag
Before agreeing to sell to AOL for $850 million, Bebo president Joanna Shields tried to sell the company to News Corp., Google, Yahoo and CBS. Didn't happen. Bebo gets too little traffic in the U.S., sources from those companies told BoomTown. Microscopic revenues probably didn't help Bebo reach its hoped-for $1 billion pricetag, either. In 2006, Bebo revenues were $7 million, with just $3 million in EBITDA — Wall Street's favored measure of operating profit. Last year, total revenues climbed to $20 million, $5 million in EBITDA. So that's a price-to-earnings ratio of 160. Oh, maybe AOL CEO Randy Falco's valuing it on growth, you say? Let's run those numbers.
For fast-growing stocks, analysts sometimes calculate PEG, or the price/earnings to growth ratio. Instead of valuing a company on current earnings, PEG attempts to take into account future earnings. Bebo's earnings grew 67 percent last year. That gives Bebo a pricey PEG of 2.38. Google's is running at 0.61 after its recent stock drop. Why didn't AOL just hold onto its Google shares instead of selling them in 2005? That way, it would have at least kept a piece of Orkut.
Comments
Bubble, what bubble?
@deathbychichi: hahahahaha. Yes!
Am I missing something? $850m for a unsustainable company/industry that brings in $3m?
I wonder how much that big B symbol cost.
if i was an AOL shareholder i would be pretty fucking pissed at AOL management considering that fuckup with time warner still hurts.
@Alaska Miller: If someone's been a shareholder since before the Time Warner merger and is still a shareholder today they deserve whatever is coming to them.
The AOL board has obviously never been over to the UK. All Bebo users are chavs. They have no brains, no jobs and definitely no money. There is nothing to advertise to these people.
In fact... their main press recently has highlighted Bebo's relationship with teenage suicide in the UK. Some kids killed themselves after being bullied through the site and on another occasion a bunch of Bebo users from Wales commited mass suicide.
[tinyurl.com] - google news link
@JDone:
wow, bebo is pioneering social suicide 2.0 amongst british chavs. and you have a problem with this?
Maybe they can do an ad deal with GlaxoSmithKline.... anti-depressants are big business.
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