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Photo Software - Thursday, October 25, 2007

Webshots Packs Its Suit Case Again As CNET Sells It To American Greetings

CNET Networks has sold its Webshots subsidiary to American Greetings for $45M in cash. CNET has bought iin August 2004 Webshots for $70M. Webshots launched in 1996 as a professional photo screensaver/wallpaper site, but expanded into photo sharing in 1999. Excite@Home bought Webshots in 1999. Two years later Webshots' management team bought Webshots back from Excite for pennies on the dollar and then subsequently sold it to CNET for another big gain in 2004.

Why would CNET sell Webshots at this point and at a loss? Because CNET is the New York Knicks of online media. Webshots is one unit at CNET that has been showing success, with traffic up 25% from last year to 7.2M uniques in September. Hang on to Webshots at least another year and at least CNET doesn't take a loss on it. What's more CNET doesn't need the money. It just closed a $200M credit line. CNET's CEO says it was a tough decision and hints at upcoming strategic changes which will become apparent to us. Still we can't imagine they can give us a reason for panic selling on Webshots.

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