September 13, 2001 3:10 PM PDT
American Greetings buys Excite unit
American Greetings will combine Blue Mountain with its own online card service, AmericanGreetings.com. American Greetings, which also owns Egreetings Network and BeatGreets, has combined its assets to become an online card heavyweight.
The deal closes the troubled history of Blue Mountain and its struggling parent company. Blue Mountain was purchased by Excite@Home for $780 million in cash and stock during the height of the dot-com boom.
Excite@Home acquired Blue Mountain for its high volume of traffic at a time when it ranked among the Top 10 most-visited Web sites, according to Jupiter Media Metrix. Executives attempted to use Blue Mountain's traffic to boost subscriptions to its cable ISP service.
But since the crash of Internet stocks, the value of Blue Mountain and Excite@Home's other Web media assets have depreciated dramatically, leaving the troubled company with few options but to sell the division.
In January, Excite@Home wrote off $4.6 billion in goodwill because of the depreciation of value for Blue Mountain and its Excite.com Web portal. That means the two largest acquisitions for @Home had dramatically declined in value since being acquired. Excite was acquired by @Home in 1999 for $7.2 billion.
Nevertheless, American Greetings expects the acquisition will not derail its online division's plan to reach profitability in the fourth quarter this year. The company added that it expects the acquisition to heighten revenues for online advertising, business-to-business marketing, paid content and e-commerce.
Furthermore, Excite@Home will buy about $3 million in advertising on American Greetings' Web sites for the next three years to promote Excite. Blue Mountain will continue to provide online greeting cards on Excite for the same period.