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Digital Sky Technologies Adds ICQ To Online Arsenal

Buried in AOL's poor first-quarter earnings report on Wednesday were plans to sell its instant messaging service ICQ to Digital Sky Technologies for $187.5 million.

"The acquisition makes sense for DST considering that the instant messaging service has a significant Russian user base," writes TechCrunch. "ICQ, which AOL acquired in 1998 for $400 million, draws around 32 million monthly unique visits ... but over 25 percent of those visits are from Russia, where it holds the no. 1 spot for instant messaging."

The deal meshes with AOL's ongoing efforts to streamline its business operations, and shed units that it deems supplementary. Earlier this month, the company announced plans to sell or shutter its struggling social network Bebo. Providing insight into AOL's approach, a memo sent to staff upon the news read: "The strategy we set in May 2009 leverages our core strengths and scale in quality content, premium advertising and consumer applications, positioning us for the next phase of growth of the Internet."

Regarding to ICQ deal, The Wall Street Journal writes: "The sale relieves AOL of an asset it's been trying to sell since the fall and is part of an overall strategy to shrink its international presence amid a larger restructuring effort under Chairman and Chief Executive Tim Armstrong."

AOL paid $407 million for ICQ in 1998. Since then, "ICQ has not stood toe-to-toe with rival products offered by Yahoo and Microsoft over the past decade," according to UK's Times Online. The site also notes that "the price DST has paid is short of the $200 million to $300 million range initially reported."

Likewise, Credit Suisse analyst John Blackledge said ICQ's selling price was at the low end of an estimated $200 million to $300 million, according to BusinessWeek.

Building an impressive portfolio of online assets, Digital Sky Technologies paid $200 million for a roughly 2% stake in Facebook last year, and has also invested about $180 million in social game developer Zynga.

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