Two years AOL bought Bebo for $850 million it looks like the fire sale for this ‘asset’ may happen. We had wondered if this was even an option considering some of the tax laws attached to the sale like this could work against AOL. If that were the case it was a real possibility that AOL would just let Bebo fade into the sunset.

According to the WSJ there appears to be a taker and it will likely be for next to nothing.

Ending a failed attempt to capitalize on the social-networking craze, AOL Inc. is close to selling its social-networking site Bebo to a private investment firm at a fire-sale price, according to people familiar with the matter.

AOL is in final negotiations to sell Bebo for a small fraction of the $850 million it paid for the site two years ago—the latest example of a hot Internet property that faded in popularity before figuring out how to make money.

The buyer is Criterion Capital Partners LLC of Studio City, Calif., according to a person familiar with the matter. The small investment firm, which specializes in turning around companies with revenue between $3 million and $30 million, has been actively pursuing technology and media acquisitions, this person said. A deal could be announced as soon as Thursday.

The chart below shows just how Bebo fares against the other major social networking sites in the world. Needless to say it’s not a pretty picture.

Quantcast has reported a steady drop in US users as seen in the graph below. Honestly, I don’t know anyone who uses the site or has used it.

The bottom line is that AOL bought a stinker and it will be a costly move. The statement below from an AOL exec pretty much sums it up.

“Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space,” Jon Brod, executive vice president of AOL Ventures, wrote in a message to employees last April. “AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking.”

So long Bebo. We hardly knew you.

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