Excite@Home, a provider of high-speed Internet access, put the finishing touches on a deal worth $780 million in cash and stock first initiated in October. The Internet company bought Blue Mountain primarily to pitch its high-speed Internet access services to the more than 9 million consumers that visit the site each month.
With the rise in competition online, Net companies have sought new ways to lure customers. Many start-ups have looked to e-greetings--which typically draw large audiences--as a way to tap into new users.
E-greetings, however, offer companies little profits. The cards are usually free, and most of the revenue is generated through advertising.
The Excite@Home-Blue Mountain deal was by far the largest in the e-greetings industry. Some analysts were shocked at the buyout price, which included an additional $270 million payment contingent on Blue Mountain meeting traffic and other performance goals. Others applauded the move despite its cost, asserting it was a good way for Excite@Home to pool a large group of new customers.
Blue Mountain is consistently among PC Data Online's top 50 sites on the Web. Last month, the Internet research group estimated Blue Mountain attracted more customers to its site than parent company Excite@Home.