In the last month, the stock of AOL has declined just over 50 percent.

But that drop is not just due to the turbulent markets of late. AOL stock had a 50 percent drop over the last six months, a 57 percent decline since the beginning of the year, and a 56 percent plunge since it went public in late 2009.

Which is why some in the industry — at private equity firms and bigger companies — have noted to me that the price of AOL might have gotten low enough for a very cheap takeover.

“You have to look, even with all the problems they have been struggling to fix,” said one person, who also underscored the advertising and other challenges that AOL faces. “But it is so inexpensive, it’s also an interesting idea.”

Said another large investor: “It’s almost free, given its cash on hand.”

Indeed, since in its recent second-quarter earnings report, AOL said that, as of June 30, it has $458.7 million in cash.

That matters, since at $10.22 a share — a far cry from its $28.45 high of all time in late April of 2010 — the market valuation of the New York-based Internet giant is only $1.09 billion.

You do the math.

To give that number perspective, AOL paid out $315 million in cash to buy the Huffington Post in the beginning of this year. And, let us not forget, under different management, AOL forked over $850 million in cash to buy the Bebo social network in 2008, and sold it for a song last year.

Even AOL thinks the price is low, announcing a $250 million stock buyback program this morning, just as shares hit their lowest point ever yesterday.

The stock is up today, though still in the basement.

To be fair, comparable companies’ valuations have also taken a hit recently. Yahoo shares are down 29 percent since the beginning of the year, giving it an affordable $15.3 billion valuation; and Demand Media’s stock has dropped 63 percent in that period, making its current price tag only $703 million.

Calling all shoppers?

It was just supposed to be a three-hour tour, um, quick sale process!

But, like a storm-tossed ship looking for any safe harbor, the Myspace sale is still chugging along, with a deal that continues to be tossed around amongst low-paying and new lesser known buyers who are now in the $20 million to $30 million range, said sources close to the situation.

The price, said others, could go as high as $35 million, but it’s far cry from the $100 million that News Corp. had been aiming for.

As part of the deal, sources said the News Corp. unit will be making significant cuts in staff and costs — up to 50 percent or more — all contingent on the purchaser. The staff cuts are, obviously, directly related to the transaction and the winning bidder.

The media giant might also retain a small minority stake.

The two names — Specific Media and Golden Gate Capital — that are now in the forefront for an acquisition deal that News Corp. hopes to complete by Thursday, its fiscal year end, have not been among the acquirers mentioned previously in the myriad of reports about the deal.

Specific Media — a large, if lesser known, advertising network — seems to be in the lead, said sources. It has been around for a half-decade and has been funded by Francisco Partners.

Golden Gate Capital is a private equity firm with $9 billion under management, which has mostly specialized in turning around companies. It has never invested in a consumer Internet company.

Both companies, sources said, will focus Myspace on music, although it is not clear which rights the site has with music labels will transfer to a new owner.

Until last week, the preferred deal for Myspace centered on an investor group that included Activision CEO Bobby Kotick and in which News Corp. (which also owns this Web site) would retain a large minority ownership stake.

But sources said there were some transactional and legal complexities that made it less attractive and News Corp. opened up the deal talks with others again last week.

Golden Capital and Specific Media emerged most aggressively, although there still remain other interested parties, sources close to the situation said, among them another investor group that includes Myspace co-founder Tom Anderson, one its other co-founder Chris DeWolfe is part of and also interest from the Criterion Capital Partners, which bought AOL’s Bebo social networking site on the cheap a year ago.

But it’s now come down to time constraints and an agreement that can be reached before the end of this month, which is also the end of the media giant’s fiscal year.

In other words, let’s get Myspace off the books for 2012!

How it came to this will likely be the focus of many a business school case. After a spectacular start, Myspace has fallen on hard times both in terms of traffic and advertising revenues.

That’s why the music-focused social networking site has not sat exactly in the catbird’s seat in terms of negotiating leverage.

While there were some rumors last week that News Corp. would close Myspace down, the sale to a small player and the layoffs are the likely outcome.

While that’s cold comfort to its employees, it’s about the best Myspace can hope for right now.

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)

Yes, Myspace is still for sale.

But, no, no one has yet made a good enough bid–in other words, at the more than $100 million level its owner, News Corp., has sought–to knock out anyone else.

And who knows who will, as those working on the deal gave a deadline today for any revised bids for the social entertainment hub.

Among those remaining in the running: two strategic bidders, although the CEO of the Vevo music service has denied interest; several private equity players, including Criterion Capital Partners, which bought Bebo from AOL for a song; and an aggressive inside effort by CEO Michael Jones, which would include venture investors and a possible continued smaller ownership by News Corp. (News Corp. also owns Dow Jones, which owns this Web site.)

News Corp. is holding out for a few more bids today from those who had expressed initial interest, said sources close to the situation, after the company provided additional information about long troubled service.

That included data showing some increased user engagement from a recent Facebook artists profile app launch and a new music playback system, among other efforts to revive Myspace.

But, added sources, this is likely to be the final call for bids, since News Corp. reportedly would like to complete the deal and get Myspace off its books before end of its fiscal quarter this month.

“I think somebody with some brains and guts could do pretty well with the property,” said one News Corp. insider, noting that the Chinese social site Renren is smaller than Myspace in both size and revenue, even though it now has a $5 billion valuation after its recent IPO.

Perhaps, but such a windfall seems about as unlikely as Myspace winning back its once-might social networking crown.

Thus, finally settling on a decent bidder is Myspace’s best–and perhaps only–hope going forward.

The companies considering a deal for the social media and entertainment site include private equity firm Thomas H. Lee Partners, Redscout Ventures and Criterion Capital Partners LLC, owner of social networking site Bebo, according to people familiar with the matter. Some firms are expected to team up on bids, a person familiar with the matter said.

News Corp. also has had talks with a Chinese Internet company about a potential deal, according to a person familiar with the matter. Online music video site Vevo also looked at a potential deal with Myspace, but the company’s interest in the site has waned, according to one person familiar with the matter.

News Corp. also owns The Wall Street Journal and All Things Digital.

Read the rest of this post on the original site

Tonight the Criterion Capital Partners-owned site is launching a redesign, with massive innovations like “Emotion Markers to mark a feed item as Cool, Funny, Sorry, or OMG; replacing those boring and vague ‘likes’ you might be used to on other services,” as well as overlay boxes that replace additional page views when navigating the site, and improved feeds and notifications.

What’s different about Bebo? Primarily, its customizable skins and designs, and its restricted default privacy settings, both catering to its younger user demographic. It also has a deal in the U.K. to offset mobile data charges, which as you can imagine is quite endearing.

While no one inside or outside Myspace owner News Corp. expects fireworks and giant piles of money, the tire-kicking for the long-troubled social-networking-turned-entertainment site actually starts Wednesday.

That’s when about a dozen interested parties will finally get a walk-through of the books and more by management and the serious talks begin.

But, said several sources, despite a variety of reports of various interested buyers, no deal for the Beverly Hills, Calif.-based Myspace is imminent with any one of them.

Instead, most expect some kind of outcome within two weeks at the earliest.

Among the possibilities is anything from an outright sale to partnership that continues to involve News Corp., which has engaged Allen & Co. to conduct the sad proceedings.

Among those in the fray are, as has been reported, music video network Vevo, owned by several media giants. It is the most prominent strategic suitor for Myspace.

But talks with Vevo are preliminary, as are all others.

In fact, most of the others interested are as expected: moneybag private equity players, such as Providence Equity Partners and Silver Lake Partners. Both have been in discussions with News Corp. in earlier efforts to offload Myspace.

Interestingly, Criterion Capital Partners, which bought AOL’s Bebo social networking site for less than $10 million last June, is not in the bidding as yet.

Neither is Zynga, the San Francisco casual gaming start-up. Various stories had rumored of its interest in Myspace, but they are inaccurate. In addition, neither AOL nor Yahoo seem likely bidders either.

And it goes without saying that the Silicon Valley social networking site that did Myspace in–Facebook–is also not a buyer. So too Google, which–back in the headier days–handed Myspace a fortune as part of an ill-advised advertising deal.

In any case, whoever buys Myspace needs a lot of patience, which seems to have run out at News Corp., where top execs take turns bashing it to shareholders.

That’s no surprise. After a laudable though glacial redesign as a music and entertainment hub last fall, traffic has declined 44 percent in a recent month from a year ago, to 37.7 million unique visitors in the U.S.

Worse still, the News Corp. unit that houses Myspace showed an operating loss of $156 million in the recent quarter, mostly related to a severe drop-off of advertising revenue at the site.

That plunge in fortunes will surely have an impact on the price buyers are willing to pay for the once iconic brand.

(Full disclosure: News Corp. also owns Dow Jones, which owns this site.)

Words cannot describe this hysterical and deliciously warped version of AOL’s $315 million acquisition of the Huffington Post by Next Media Animation of Taiwan.

Except BoomTown has hit replay 10 times now.

It takes getting Taiwanesed to an entirely new level of surreal.

In its weirdest yet–and that is saying a lot–here is co-founder and Editor in Chief Arianna Huffington depicted as a giant, green Wizard of Odd head; AOL CEO Tim Armstrong with a crazed Bebo monkey on his back; inappropriate gay references; and an inexplicable appearance at the end by a manically laughing, shark-finned, Apple-iPad-holding Rupert Murdoch of News Corp.

I suggest watching it on pause, as there are tons of really funny details all over it.

Enjoy the video:

I had a hunch that Viacom sold off Harmonix, which makes the Rock Band games, at a steep discount last month. But I’m still surprised it was this cheap: I’m told that investment group Columbus Nova paid $49.99–the list price for “Rock Band 3″–and got the entire company.

There’s more to the story, of course: People familiar with the transaction tell me Harmonix’s buyers also assumed the game company’s liabilities. That includes expensive music rights fees, and responsibility for lots of unsold games and equipment sitting on warehouse shelves.

And I’m told that the deal is structured in a way that will let Viacom net something like $150 million in tax benefits, similar to the AOL/Bebo fire sale last year. Given that Viacom paid $175 million for Harmonix a few years ago, things could be worse.

[UPDATE: The Los Angeles Times reports that Viacom will actually receive a $50 million tax benefit, and offload $100 million in liabilities. That makes more sense, and I've since confirmed it myself. My apology for the error.]

Still, it’s a fire sale price no matter how you look at it. And that can’t be comforting to Harmonix’s remaining employees, who are likely going to be facing a very serious restructuring.

Columbus Nova’s PR reps wouldn’t comment on the sale terms (neither would Viacom) but pointed me to an earlier statement from the company, which said it was “really excited about backing the world-class team that has consistently produced such great games and helping them grow the company and its brands.”

That’s what Michael Birch is doing, by signing on as an advisor to Bebo, the social network he co-founded in 2005, and investing an undisclosed amount of cash back into the business.

The irony, of course, is that the reason Birch has cash on hand to invest in Bebo is that he sold the company for $850 million to AOL in 2008, at the height of the Web bubble. AOL ended up writing down the entire purchase, and sold it to Criterion Capital last summer for a few million dollars and a tax write-off.

Now Criterion CEO Adam Levin says he can make something out of the business, though reports are bubbling through the tech world that he’s already trying to flip the thing.

I’ve been told he’s looking to sell for $25 million, but for the record, a PR rep says that “we are not actively marketing Bebo for a sale.” Noted! (But if, say, Google wanted to pick up a piece to help jumpstart its social efforts…)

AOL’s earnings numbers were sent out of whack by a giant $1.4 billion goodwill charge. Most of that comes from the write-down the company took when it sold off Bebo for a bag of potato chips. But that’s not all of it.

The company’s description: “The underlying drivers of the impairment were a significant increase in net assets due principally to cash provided by continuing operations and a significant deferred tax asset associated with Bebo concurrent with a significant decline in AOL’s stock price since April.”

In any case, if you strip out those charges, AOL recorded the earnings equivalent of $0.66 a share, just under Wall Street’s $0.67 consensus.

But the two important things to watch here are the rate of decline at AOL’s subscription business (which powers the company in the present tense) and the story at AOL’s ad business (which is its putative future). Here’s the breakdown:

That 27 percent subscription revenue drop is steeper than expected. Perhaps people, like my in-laws — who continue to pay AOL a monthly fee even though I beg them not to — are wising up.

The bright spot for the company is its U.S. domestic display sales — that 7 percent decline is better than Wall Street had expected, and AOL says that if you net everything out, sales numbers for its premium inventory are essentially flat, which is the new up!

AOL’s words: “Domestic display advertising revenues reflect flat premium inventory sales compared to the prior year period, despite beginning Q2 2010 with a smaller pipeline, due to incremental revenue generated intra-quarter by AOL sales representatives, offset by the impact on sales of a salesforce reorganization in Q1 2010.”

Here’s Citigroup’s Q2 cheat sheet, via Mark Mahaney:

Armstrong’s opening message to investors during the 8 am earnings call: “Nobody likes to show up to these calls and report down numbers in an up market.” But he restated his mantra: AOL is in the midst of a long turnaround, and eventually, investors will be able to see results.

The answer: the site still has a large user base, a target demographic that should allow it to carve out a niche for itself, and a few obvious ways to make more money, says Adam Levin, the serial entrepreneur who acquired the company.

AOL bought Bebo for $850 million two years ago. It sold it last month for a small fraction of that. (Neither AOL nor Mr. Levin would disclose terms of the deal.) Mr. Levin, managing partner of private-equity firm Criterion Capital Partners, has invested in films, a mobile video company, a company that makes golf grips, and a minor-league hockey franchise. Now he’s taken over Bebo as its CEO. The 31-year old says that he’s planning to treat the company like a start-up—with a few advantages.

While users have left Bebo since it was acquired by AOL, it still has 117 million registered users. Of those, about 13 million use the site at least once a month. Bebo gets about 4.5 billion page views each month, according to the company.

Read the rest of this post on the original site

The Facebook CEO did say there is “almost a guarantee” that the company will double its user base from 500 million to one billion, which is pretty heady stuff, but also pretty hazy stuff. (We already know that Facebook is really big.)

And Zuckerberg again danced around the question of Facebook’s eventual IPO. But unless he flat-out declares that the company will never go public, there’s almost no reason to ask him about it: Facebook is quite clearly headed for an IPO, one day.

Zuckerberg’s summation of Facebook’s global hegemony is worth pondering for a minute, though:

Facebook’s global domination is almost complete, he said. “We are down to just four countries where we aren’t the leading social network.”

Zuckerberg added that in Russia Facebook had just 1 million users, the kind of numbers that saw AOL sell off Bebo and ITV relinquish Friends Reunited. But in Facebook’s case, growth is “doubling every six months”, according to Zuckerberg, and Japan and Korea have similar user bases.

He said that Facebook can tell when an explosive growth “tipping point” is about to be reached by who is “friending” who. When Facebook first launches in a country, nearly all the friend connections are with foreign Facebook users.

“We know that a country has tipped when local-to-local connections outnumber local to foreign,” he added. “It is a long-term thing [and with regard to the four left to tip] we are probably not going to win in six months, not in a year [but] things look promising in three to five years out.”

Meanwhile, if you want a really deep dive with Zuckerberg, check out Inside Facebook’s recent Q&A.

Neither side will fess up to a purchase price, though Dan Primack at PE Hub hears that Criterion’s initial offer for the property, which AOL (AOL) bought for $850 million in 2008, was no more than $2.5 million. The final price, he guesses, would be in the $5 million range.

On the plus side, AOL, in a Securities and Exchange Commission filing, says the transaction will allow it to record an income tax benefit of up to $325 million this quarter. Lemons from lemonade!

Criterion press release:

Los Angeles, CA–[June 17, 2010]–Criterion Capital Partners, LLC (CCP), a merchant banking and financial advisory firm based in the United States, announced today that it has acquired the Bebo business, the youth-centric social media network, from AOL Inc. As part of the deal, CCP will assume the rights and complete operating control over the global social platform business.

The acquisition and financing was lead by Adam Levin, managing partner at CCP, in partnership with accomplished business strategist Paul Abramowitz and Web entrepreneur Richard Hecker. CCP will take over Bebo’s global operations immediately and retain a San Francisco-based headquarters. Exact terms of the deal are not being disclosed by either party.

“The young, highly active user base, revenue history, presence in countries throughout the world and solid technical infrastructure make it an attractive media platform both as a standalone entity and in the context of our broader investment objectives,” said Levin.

“Criterion Capital Partners are specialists in facilitating growth plans and turnarounds, and are well placed to drive Bebo’s effort to strengthen its foothold within the highly competitive social networking arena,” said Tim Armstrong, Chairman and Chief Executive Officer, AOL.

Bebo launched in 2005 and was acquired by AOL in March 2008 for $850 million. It is a social media network that combines community, connections, self-expression and entertainment via a range of social tools, games and a growing mobile platform. Bebo has a strong user base across the globe, including in the U.S., the U.K., Ireland, Australia, New Zealand, Canada, Poland, France, Germany, Italy, Spain, India, Pakistan and the Netherlands.

About Criterion Capital Partners, LLC
Criterion Capital Partners is an integrated advisory and consulting firm serving U.S. and international clients who seek the preparation and implementation of APOs, outsourced business development, acquisitions or marketing strategies–executed concurrently with the organization and structuring of capital procurement. Led by Adam Levin, CCP delivers objective thinking, proven practices and best-of-breed partners to help clients achieve their specific development and financial goals.

AOL’s 8-K filing:

As previously announced, AOL Inc. (the “Company”) has been exploring strategic alternatives for its Bebo, Inc. (“Bebo”) subsidiary including a sale or possible shutdown. The Company has completed this process and is today announcing the sale of substantially all the assets of Bebo to an affiliate of Criterion Capital Partners, LLC.

The Company currently anticipates that following this transaction it will treat the common stock of Bebo as worthless for U.S. income tax purposes. The Company’s current U.S. income tax basis in Bebo is approximately $750 million. As a result of the anticipated worthless stock deduction for the common stock of Bebo under U.S. income tax law, the Company expects to record a deferred tax asset and corresponding benefit to its U.S. income tax provision in the second quarter of 2010 in a range of $275 million to $325 million. The Company’s tax conclusion with respect to the common stock of Bebo is subject to examination by the U.S. Internal Revenue Service. Additionally, given the recent volatility in the Company’s stock price and disposition activity, the Company will be required under generally accepted accounting principles to test the goodwill of its sole reporting unit for impairment in the second quarter of 2010.

[Image credit: donger]

—————–

Mashable says AOL has sold Bebo, but doesn’t know who bought it or the price paid for the social network. PE Hub’s Dan Primack (via Business Insider) thinks the buyer is in Southern California.

What does AOL say?

No comment. Or more precisely: “We haven’t announced anything,” says PR boss Tricia Primrose.

Okey-dokey! More info if and when it surfaces.

But if Tim Armstrong can get anyone to pay anything for Bebo, it will be a small victory for AOL (AOL).

The previous AOL regime bought the social network for $850 million at the height of the last Web bubble, and the portal has since had to write the whole thing off. For some reason, Time Warner (TWX) boss Jeff Bewkes, who signed off on the purchase, never gets tarred for that one, but I digress…

Armstrong has already announced that if he can’t find a buyer for Bebo, he’ll shut the whole thing down. Which makes it pretty hard to drive a hard bargain. Anyone want to hazard a guess?

Good news for AOL CEO Tim Armstrong: His predecessor, AOL founder Steve Case, thinks the Google veteran has a chance to turn around the company. The bad news: He has a very long way to go.

Liveblog

11:14 am: Apologies, technical difficulties–joining late.

11:15 am: Armstrong is traveling back in time, discussing AOL (AOL) prior to his arrival. The company was managed based on gross revenue and page views, and that may work for some, but those metrics didn’t make sense to me.

Kara: Such as?

Armstrong: The Bebo acquisition looked successful, because page views were shooting up, but unique visitors were dropping down. Photo galleries with 80 photos into it. That sort of stuff. We’re pulling back on that stuff.

Kara: You’ve been pulling back on a lot of stuff. Revenue is down, too. Not a bad idea to go to zero so you can build back up.

Armstrong: Hopefully we don’t go to zero. But (former Gap CEO) Mickey Drexler gave me good advice. He told me I’d be under a lot of pressure to move the numbers up and that I should resist it.

11:17 am: Kara–anyone from Google (GOOG) you didn’t hire?

Armstrong: We need people who are passionate, but also willing to play on a team. The analogy I use is “when I got to AOL, there were a lot of people playing golf.” We need people on an orchestra or a football team.

11:18 am: Kara–I’ve called this the best management team to run a digital lemonade stand. You have a big team and a small business.

Armstrong: Compared to Time Warner (TWX), it’s a small business. But it’s still a large business: 100 million unique users in the U.S., etc. Bigger point: We have the largest opportunity on the Internet. But I tell investors that they shouldn’t be expecting quarter-after-quarter results. That’s not what we’re doing.

11:19 am: Kara–Okay, so what’s the opportunity?

Armstrong: It’s melding technology and journalism. Local efforts via patch. “We believe the local marketplace for journalism is important, and the local marketplace for services online is important.”

11:22 am: Armstrong–Beyond local, there are other areas that we can move into to fill unmet needs. Like religion–big opportunity there.

Kara: So how are matching tech with journalism?

Armstrong: We’re marrying demand algorithms with…

Kara: Like Demand Media?

Armstrong: They’re more search-based. We’re trying something else. But also giving editorial people better data. When I was at Google, I used to go to meetings at publishers where sales people had reams of data, and the journalists had none. There’s a lot of fear that some journalists have about technology and data, but they can use them as tools. But “the fear is where the opportunity is….There’s no reason why technology can’t fuel opportunity.”

11:26 am: Kara–So how do you sell all this stuff?

Armstrong: We service a lot of large audiences, but have technology that lets you delineate that audience and just serve who you want. And we also have models that let brands get next to the appropriate content.

Kara: You mean putting brands in the story?

Armstrong: No. Church and state is important. Brands next to stories, getting brands in front of the appropriate audiences.

11:28 am: Kara–You’re selling off Bebo. Will anyone buy it?

Armstrong: We’ve said we will sell it or shut it down. We’ve had interest from people who are interested in buying it. We’ll see how that turns out.

Kara: What about other stuff you might sell?

Armstrong: We’re keeping stuff that’s valuable. Mail and communications are important to us.

Kara: Social networking, given that you’re selling Bebo?

Armstrong: Very valuable. But it will be a joint strategy. Being a principal in a social network is something that we’re clearly not focused on.

11:29 am: Kara–What about search? You helped sign that big Google deal.

Armstrong: Last week, we kicked off the process of the search deal. We are meeting with multiple partners.

Kara: So you’re not re-upping with Google?

Armstrong: Google has been a great partner for 10 years. There’s a disadvantage in that we know what works and doesn’t work, and so do they. So now we need to compare both our needs, with Google and others.

Kara: There are only two partners, right?

Armstrong: There are probably more than two that we’ll talk to [like who?]. We’re valuable to search partners because the AOL audience performs very well for search. We perform more strongly than our market share implies.

Kara: Will you want a guarantee like the original deal?

Armstrong: We have a rev-share deal. There may be upfront payments, there may not be. But either way, those upfront payments are usually about market. They’re not core to the arrangement.

11:33 am::Kara–How do you look at Google and what they’re doing?

Armstrong: One of the things that Google has done a really good job with is taking risks, and you know, push, push, push. Like a lot of successful companies.

On the outside, as a partner, you appreciate that innovation. On the partnership side, you have to realize that you’re one partner out of a lot of partners that they have. And that’s the piece of it where personal relationships really matter. With them or other partners.

11:34 am: Kara–What about risks they face?

Armstrong: Risk for any company that size is how do you keep innovating? When Mark Zuckerberg was up here and you guys were hammering him, that can make you want to retreat. And you have to keep innovating.

11:35 am: Kara–AOL used to be innovative and important. The brand is tarnished now. Can you revive it?

Armstrong: Two different brands. By the way, before I officially left Google, I had a lot of people telling me to kill off the brand. But then I traveled around. And I found that there’s the brand that media people know about, and the merger, etc. And then there’s the brand that everyone else knows, and they have warm fuzzy feelings about it.

11:37 am::Who are your competitors? What do you think of Yahoo (YHOO), etc.

Armstrong: We have partnerships with Yahoo; we compete with them for users and advertisers. But AOL is not in a situation where we need to give advice or comment to people about what they ought to be doing. Yahoo is a big, strong company, though their strategy is much more focused on what we’re doing now, which is great.

Q&A

Q: Are you doing anything about the Gulf oil spill? Are you doing anything with your local journalism to help people with that? (seriously).

A: We’re covering it nationally. But we actually are working with someone locally, where there’s a girl in a town, where she’s raising money for the Gulf, and it’s not a town on the Gulf, but we’re trying to help her.

Q: Can you talk about AOL culture and how it’s changed since you got there?

A: At Google, I was managing 2,500 people. Now I’m managing 4,700. So I’ve learned that cultures are okay when they’re moving–up or down–and everyone knows what the plan is. They don’t work when there’s no plan. So people who don’t want to stay and don’t like the plan need an opportunity to leave. This is “Full Metal Jacket.” Turning this company around is not going to be easy. It’s not going to be eight-hour days.

Q from Kara: Management style?

A: I’m collegial. But at the end of the day, sometimes I need to execute and get it done. Like when I came aboard, there was a $400 million check I had to sign for a distribution deal. And then I asked people at a meeting to speak up about it and tell me what they said. There have been many cases where I’ve had to make decisions without a collegial environment. But the culture is getting better and collegial.

Q&A over.

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as possible. It is not intended as a transcript and should not be interpreted as one.

AOL shares pushed higher today than they have been since its November spinoff, rising almost four percent to close at $27.44.

And the reason for the rise? One savvy investor suggested it was due to yesterday’s announcement that the company might shut down Bebo, the social networking site it egregiously overpaid for in 2008–$850 million in cash–only to see the asset dwindle badly.

Rather than finding a buyer, said the investor, a shutdown might allow AOL (AOL) to write down some of that acquisition, yielding it hundreds of millions of dollars in tax savings.

AOL bought Bebo in 2008, when it was still a Time Warner (TWX) division.

In addition, AOL is in the midst of selling off its ICQ instant-messaging business–likely to foreign buyers, in one of the slowest transactions ever. Once that deal is done, it could nab the company upward of $100 million to $150 million in cash.

With its current cash flow, that could give CEO Tim Armstrong a nice pile of dough, which could be further supplemented as he gears up for negotiations over a new deal for AOL’s search business with both Google (GOOG)–its current partner–and Microsoft (MSFT).

While the big-money guarantees are likely a thing of the past, AOL’s business–unlike, say, MySpace’s–is considered valuable by both companies. The current Google deal is up in December.

In any case, while the failure of translating its Bebo acquisition into any kind of success is pretty clear, perhaps the complete disaster does have some silver lining.

Almost from the minute former AOL head Randy Falco handed over a giant bag of cash to Joanna Shields, the awfully clever chief money charmer of once darling social networking site Bebo, it was clear it was not going to end well.

Essentially, AOL (AOL)–then a unit of Time Warner (TWX)–had forked over $850 million to corner the market on teen girls in the United Kingdom.

Of course, all those girls are now using Facebook.

It was, sorry to say, the peak of the social networking lunacy of early Web 2.0, which is now being bookended by another series of wackadoodle fundings for start-ups by venture capitalists insecurely prompted not to miss the next big thing.

Not much changes. As I wrote about the Bebo deal two years ago in a post titled, “Bebo: By the (Not So Big) Numbers”:

What’s AOL getting for its $850 million in cash to purchase social-networking site, Bebo?

A very attractive social-networking service and a very experienced exec who has been running it.

But, perhaps more importantly for those who focus on pesky numbers, not a whole lot of revenue and negligible profits, judging financial information I got a gander at, courtesy of sources at several companies that looked at funding or buying Bebo.

And the rest of the overall outlook for Bebo? A small but growing business, with nice user engagement with strong page views and minutes spent per session, but little traction beyond Britain and Ireland, and too small a presence in the critical U.S. market.

That was the best AOL got from the deal, as it turned out, as the asset declined and Shields was shuffled out of AOL by new CEO Tim Armstrong (ironically, she’s now running a big chunk of international sales for winner-took-all Facebook).

Now comes the final shoe dropping, with AOL admitting in a filing the glaringly obvious–that it was evaluating strategic alternatives with respect to Bebo, which could include a sale or shutdown of Bebo in 2010.

In a message shared with employees today, the company noted:

The strategy we set in May 2009 leverages our core strengths and scale in quality content, premium advertising and consumer applications, positioning us for the next phase of growth of the Internet. As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success. Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking.

AOL is committed to working quickly to determine if there are any interested parties for Bebo and the company’s current expectation is to complete our strategic evaluation by the end of May 2010.

Quicker translation: Bebo is a dog and it bites.

But the experience is one that will soon be forgotten with the next careless gorging of VC funding.

Not be lost on anyone should be the sudden departure of Jay Adelson as CEO of Digg this past week from the social news site, yet another example of hot going cold in the eyes of Silicon Valley.

At one time Digg and Bebo could do no wrong. Now, no right.

In actuality, neither characterization is correct, but it matters little. In the warped tech perception game, Bebo is apparently dead and it’s time to bury the corpse and move on.

It’s familiar territory for her in more than one way, since she once helped Google (GOOG) manage the same geography.

Shields has had a busy couple of years: Two years ago, she arranged the sale Bebo to AOL (AOL) for $850 million. A year after that, she took off, and ended up in a content start-up backed by Elisabeth Murdoch’s Shine Group.

It’s unclear what happened to that now less-than-shiny project.

Blake Chandlee, who had been running the EMEA group at Facebook, is getting moved out of that job and will now run sales in emerging markets: Eastern Europe, Asia Pacific and Latin America.

This is the second high-profile hire–and of a former Googler–by the social networking site recently. Last week, Facebook hired top-ranking Google ad exec David Fischer as VP of Advertising and Global Operations.

With Fischer and former Googler COO Sheryl Sandberg, who has been eyeing Shields as a possible Facebook recruit since she left AOL, it seems an Ex-Googleplex is forming at Facebook’s new HQ in Palo Alto, Calif.

Some of the many former Googlers include Elliot Schrage, VP of Global Communications, Marketing and Public Policy; Grady Burnett, head of online and inside sales; Don Faul, director of global online operations; and Ethan Beard, director of the Facebook Developer Network.