• Silicon Alley Insider, Thursday, August 7, 2008 11:30 AM

AOL, which continues to weigh down Time Warner's stock and may soon be sold, could be forced to write down its recent acquisition of Bebo, says Silicon Alley Insider's Peter Kafka. In its most recent SEC filing, Time Warner reveals that $760 million of the $857 million it paid for Bebo price was attributable to goodwill, while another $86 million went to "specific amortizable intangible assets." That leaves $11 million for the actual company. In other words, says Kafka, "there's almost no there there."

Goodwill represents the premium AOL paid for the social network. It was almost all premium. Now, this may be standard practice in the Internet biz, but sometimes, when the asset doesn't deliver as promised, the acquirer is forced to come back and tell investors that it paid way too much, then it gets to write down the loss. Time Warner had to do this with AOL in 2003. EBay had to do this with Skype in 2007.

"Now that Time Warner has declared that it spent $846 million on something it can't really define, that's a fat target for Bebo skeptics," says Kafka, adding that Bebo executives never made much of an effort to justify the valuation, anyway.

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