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Is Friendster up for sale?

The social networker has hired Montgomery & Co. to shop itself around for a buyer, sources familiar with the matter say.

Stefanie Olsen Staff writer, CNET News
Stefanie Olsen covers technology and science.
Stefanie Olsen
2 min read
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.