Frequent readers of Media Metrix's(Nasdaq: MMXI) Internet viewership data have probably long wondered how an insta-greeting card site with the odd moniker "bluemountain.com" was able to maintain a position among the most-visited sites on the World Wide Web month after month.
Even those who have taken the trip over to the Blue Mountain Arts site probably think it's basically just "neat." Users can instantly send friends, family, and associates customizable digital greetings for every occasion imaginable free of charge. (There's still time to send cards this month to commemorate Peace, Friendship and Goodwill Week, Juliette Gordon Low's Birthday, and Samhain.)
What's a "neat" site worth? Quite a bit, apparently. Cable Internet access company and Rule Breaker Portfolio holding Excite@Home(Nasdaq: ATHM) today said it will buy the site for 11 million shares of its stock -- worth about $430 million as of Friday's close -- and $350 million in cash.
There's the possibility of another $270 million in Excite@Home stock on the way if bluemountain.com meets certain traffic, reach, and other performance targets this holiday season.
OK -- so that's $1.05 billion for online greeting cards? Would it really have cost Excite@Home that much to set up their own Mother's Day mailing service with page design that's beginner-level at best?
Of course it wouldn't have.
What Excite@Home is paying for is the eyeballs and their respective owners' propensity to shop online; the company justified the price it paid with a lengthy list of figures, including 9 million -- as in 9 million unique monthly users.
Excite@Home believes bluemountain.com, which has a gift recommendation service built into its website -- along with marketing relationships with various flower, candy, and other merchants -- provides considerable e-commerce opportunities; the site claims to service upwards of 1 million gift-related transactions daily. It also wants to use its newfound access to bluemountain.com's users to market its own Internet access service.
For all of bluemountain.com's vaunted usership, though, one number Excite@Home left out of its rather wordy press release is revenue: how this very sizable purchase will affect its top and bottom line isn't known and investors are probably more than a bit curious.
By the same token, it should be interesting to get a look under the hood of bluemountain.com once more information about its workings becomes known through Excite@Home. Operating solely on word-of-mouth-and-card marketing, page views, and transaction fees, it may eventually earn itself a chapter in the textbook of online business development.
Some, however, seem relieved to see the closely held story come to an end.
"As Blue Mountain started down the public road," the site's founders said in an online statement, "we found ourselves in a fickle world where we did not feel at all comfortable.... After the merger closes in December, we will be able to get back to creative pursuits, and with the proceeds we receive, we plan to support world health, hunger relief, and peace."
Honorable indeed -- and their newfound fortune could buy quite a few Thanksgiving turkeys.
