Less than two years after snapping up online greeting card site BlueMountain.com for $780 million, ExciteAtHome has agreed to sell it to rival American Greetings for $35 million in cash.
The acquisition accelerates the consolidation in the online greeting card industry, which at the height of the Internet bubble was one of the fastest growing and most promising Internet content sectors. BlueMountain.com will become part of American Greetings online subsidiary AmericanGreetings.com, which already operates Egreetings.com, itself once an independent, publicly traded company, and BeatGreets.com.
BlueMountain.com, which was called Blue Mountain Arts before being purchased by Excite, once embodied much of what was promising and eventually proved absurd about the Internet.
Blue Mountain allowed customers to send online greeting cards for free over the Internet. Its service grew like a wildfire fanned by heavy winds despite virtually no paid advertising of the Blue Mountain Web site. In the process, Blue Mountain helped define the notion of "viral" marketing the ability of Internet businesses to spread rapidly by word of mouth. When Excite purchased it in October 1999, Blue Mountain's customer base had grown to an astounding 12 million, and the company was the largest independent Web site with substantial reach.
Blue Mountain was also seen as one of the most successful "eyeball" plays Internet ventures that sought to lure customers with free services, hoping to capitalize on their fast growing customer bases at some point. But the lack of an effective way to turn those "eyeballs" into paying customers or meaningful advertising dollars eventually became the downfall of Blue Mountain, as well as a long list of sites that offered free content, ranging from Excite, Yahoo and countless others.
The deal will give debt-laden Excite a much needed cash infusion, but the company remains in deep financial trouble. Its independent auditor recently expressed concern about the company¹s ability to continue as a going concern, and several executives have departed recently, including its CFO, who resigned Monday. Excite shares closed at 39 cents on Monday, the last time shares traded on the Nasdaq.
The company is now trying to divest some of its media properties to fund its broadband Internet access business.
"For ExciteAtHome, the sale of BlueMountain.com maps to our action plan to focus on broadband and to bolster our cash position and lower operating costs," COO Matt Jones said in a statement.
AmericanGreetings.com said it still plans to turn a profit by the fourth quarter, and said the acquisition should boost profits in 2002
