United Online's (UNTD) primary business has traditionally been selling internet access. With proliferation of cheap broadband and packaged internet service, revenue from this business was in decline.
In 2004, the company undertook a diversification plan to transform from a pure internet service provider into a diversified internet media company. Their primary means of diversification was through acquisition. The main acquisitions were Classmates.com, an online social networking site founded in 1995, and MyPoints.com, a loyalty marketing service. These sites created a growing media and advertising revenue stream to offset their declining internet access revenues.
Today United Online reversed course by filing for an IPO for Classmates Media, which will include both classmates.com and mypoints.com. Following the IPO, United Online will still retain control interest and majority voting power.
The timing is opportunistic. After the ascension of MySpace and recent numbers being thrown around for Facebook of up to $10 billion, maybe the company is willing to undiversify a bit while the price is right.
Monday, August 13, 2007
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