November 14, 2005 4:11 PM PST

Is Friendster up for sale?

Friendster, the former high-flying social network, has hired a banker to shop itself around for a buyer, according to sources familiar with the matter.

The San Francisco-based company has hired Montgomery & Co., a boutique investment banking firm in Santa Monica, Calif., to find a buyer, CNET News.com has learned. Company executives have been talking to several Internet media companies about an acquisition, according to those sources.

Friendster spokesman Jeff Roberto declined to comment for this story. A spokeswoman from Montgomery said the company could not confirm nor deny whether Friendster is a client.

Earlier this year, Friendster was shopping for a buyer, and according to one source, it was looking for a sale price in the ballpark of $200 million. Now its price has been lowered to the range of $50 million to $100 million, the source said.

Founded in 2002, Friendster was an early phenomenon as one of the first and most popular online social networks that allowed people to create an online profile and connect with friends, and friends of friends, to build up a kind of virtual party line. It attracted so much attention that it snagged funding from well-known investors including Google-backer Kleiner Perkins Caufield & Byers and Benchmark Capital.

But success was bittersweet. During its salad days, the network often couldn't handle the heavy traffic demands from visitors, and it suffered repeated outages. Friendster also struggled to find a solid business model as the network grew. It hired NBC executive Scott Sassa to lead the company's transition to a larger media company, but his tenure turned out to be brief.

Meanwhile, as Friendster's star has fallen, MySpace.com's has risen.

Also started in 2002, MySpace was a social network geared toward the Los Angeles music scene, but it quickly became a hub for people aged 14 to 20. The site has amassed roughly 33 million members in two years.

MySpace's traffic has jumped 840 percent in the last year. From September of last year to this year, MySpace rose from 1.85 million to 17.5 million visitors per month, according to research firm Nielsen/NetRatings. That doesn't count repeat visits.

From September 2003 to March 2004--during the height of Friendster's popularity--it drew more than 1 million unique visitors per month, according to Nielsen. But since then, Friendster's traffic has fallen to roughly half that. In September, it attracted 585,000 unique visitors.

Friendster recently reconfigured itself as more of a dating or personals site, and it has added features like blogs and photo sharing. According to its Web page, the site has roughly 21 million members.

The company also has been reaching out for more traffic through a mass e-mail campaign that involved communicating with old members who hadn't been on the Friendster site in years. The Friendster e-mails implied that they originated from a friend of the recipient, rather than the company itself.

5 comments

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Don't Bite the Hand that feeds you.
If your site was easy to use like myspace and had video and music playback. No problem.

And if you did not fire your employees for writing blogs, no problem but no, you fired her. <a class="jive-link-external" href="http://news.cbsi.com/Friendster+fires+developer+for+blog/2100-1038_3-5331835.html" target="_newWindow">http://news.cbsi.com/Friendster+fires+developer+for+blog/2100-1038_3-5331835.html</a>
Why?

So you lost me and many others. I do not care for your service, nor will I pay for it and one more thing, stop sending me SPAM to come back because I won't.

And I dislike the fact you had an invite only model in the begining and then suddenly wanted us to be your users.

Don't bite the hand that feeds you and that is your users and employees.

Yahoo 360 is so much better and is always available when i need it and myspace, well it's just EASY to use.

Salam
~Nael~
Posted by Nael (112 comments )
Reply Link Flag
Overpriced
Even at 50-100MM, they're still overpriced... Amazing the subtle but critical differences between myspace (started by hollywood entertainers) and friendster (started by silicon valley engineers).

Dazhi Chen
Posted by dazhichen (4 comments )
Reply Link Flag
And let us not forget
www.tribe.net

A highly functional site that does not suffer outages other than planned ones for upgrades, has better functionality than friendster, more community oriented than a dating site, and is just way better.

And unlike Myspace.com is more adult oriented.
Posted by Tomkat6669 (5 comments )
Reply Link Flag
Big Corps Spending Money
It seems that big corps are getting their hand in the cookie jar buying up everything that could possibly be the next myspace. The new kid on the block [urbnites].com is rumored to already be in the process of being sold after only being online for &lt; 1 month.
Posted by silex63005 (1 comment )
Reply Link Flag
youtube
<a class="jive-link-external" href="http://youtube-yotube.blogspot.com" target="_newWindow">http://youtube-yotube.blogspot.com</a>
Posted by youtube18 (1 comment )
Reply Link Flag
 

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