American Greetings adds BlueMountain to on-line greeting cards empire - Brief Article

DSN Retailing Today, Oct 1, 2001 by Doug Desjardins

CLEVELAND -- American Greetings Corp. added to its stable of Internet greeting card sites with the $35 million purchase of rival BlueMountain.com from the cash-strapped Excite@Home. The Sept. 13 transaction took place two years after Excite@Home bought BlueMountain.com for $780 million in a cash and stock deal.

BlueMountain.com will join an Internet division that includes AmericanGreetings.com, Egreetings.com and BeatGreetings.com. The addition is expected to help American Greetings boost traffic on its Internet greeting card sites to more than 100 million unique visits each year. The company acquired Egreetings.com and BeatGreetings.com in March.

An American Greetings spokesman, David Poplar, said that the company may make some minor changes to BlueMountain.com in the coming months. "We have a subscription model on AmericanGreetings.com, and we may be looking to leverage that," said Poplar. "But for the most part, everything will remain the same."

AmericanGreetings.com offers consumers a six-month Platinum Club subscription for $19.95 that includes six free paper greeting cards, three free video rentals at Blockbuster Entertainment and personalized on-line greeting designs.

Analyst Heather Dougherty believes the online greeting card sector will remain essentially the same despite the recent consolidation.

"Even though there's not a lot of ad revenue out there right now, free greeting card sites are going to stick around because they attract a lot of traffic that can be used to sell other products," said Dougherty, a retail analyst with research firm Jupiter MediaMetrix. According to Jupiter, more than 50% of the U.S. population and 85% of Internet users will visit an online greeting card site this year.

Under terms of the purchase, BlueMountain.com will continue to be the preferred provider of on-line greeting cards on the Excite Network for the next three years. "It's good that Excite will be able to maintain its ties with BlueMountain.com even though it no longer owns it," Dougherty said.

Excite@Home executives plan to use the $35 million to stabilize their debt-stricken company and pursue new ventures. "For Excite@Home, the sale of BlueMountain.com maps our action plan to focus on broadband and to bolster our cash position and lower our operating costs," said Excite coo Matt Jones. In August, Excite's former auditor Ernst & Young LLP expressed concern about the company's ability to stay in business. On Sept. 10, Excite@Home's cfo Mark McEachen resigned.

The high-speed Internet access firm purchased the greeting card publisher in 1999 for $430 million in stock and $350 million in cash. At the time, Excite@Home's stock was trading at $37.87. The price per share was 37 cents on Sept. 20.