More AOL/Bebo Fallout

The press and financial analyst reaction to AOL’s $850 million cash deal to acquire Bebo has been resoundingly negative. Most of the focus seems to be on the fact that AOL is already screwed up (agreed) and that adding Bebo to the mix won’t give it anywhere near the advantage in social networking that AOL seems to think it will.

As Henry Blodget of Silicon Alley Insider put it, “We don’t get it. … The most likely outcome of putting the two companies together, therefore, is that the companies’ weaknesses complement each other. And they go down together.”

AOL does have a history of failed acquisitions (see: Netscape) and its track record in social media has been spotty, granted. But I also believe that if AOL wants to play in this market its only realistic chance is with Bebo. Bebo has an interesting business and has done some creative things in online social network marketing. If AOL can nurture that and grow it, then it has a chance.

I’ll be watching this one closely.