4th UPDATE: AOL To Acquire Social Network Bebo For $850 Million

AOL has decided to takeover social network Bebo for $850 million since the troubled Time Warner Inc unit continues to refurbish in the advertising-focused business.

This is a huge leap for AOL from the Internet-access gateway to the online advertising giant along with the ranks of Google Inc and Yahoo Inc. This deal has been due to the ad-sales growth slowing down.

This transaction may stop rumors like AOL is following the deal with Yahoo. The investors are of the opinion that the Time Warner may sell it off.

The Chief Executive Randy Falco believes that if the acquisitions made by AOL prove to be fruitful is what they are expecting. The Bebo deal is roughly about $ 1 billion of the AOL acquisitions. Bebo is not so popular in comparison to Facebook and MySpace in US.

The price tag is the fraction of the Time Warner's more than $46 billion in revenue of the year 2007. According to the research, the down session for stock markets, Time Warner shares recently traded at $14.46, down 2% on the day and earlier stock price hit a 52-week low of $14.22.

The acquisition of Bebo may speed up the slow growth of AOL. It is difficult to earn money from the social networking sites.

The chief operating officer of AOL is of the opinion that the problem lies in trying search advertising to the social networks. AOL is planning to include graphical display ads onto the Bebo’s pages. There is also an objective to link Bebo with AOL’s instant messaging services. There was a rumor that Yahoo and Microsoft were planning to pursue investment or other deal for the Bebo.

According to Balderton Capital which is a European capital firm is the owner of 15.7% stake of Bebo, its profits from the AOL sale is $140 million.

How will this affect Google? Many webmasters and seo consultant have already started talking about this.