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Excite@Home Greets E-card Firm with BlueMountain.com

How the high times have come and gone.

Struggling Excite@Home Thursday sold its popular e-mail greeting card subsidiary BlueMountain.com for $35 million in cash to AmericanGreetings.com -- a sum that pales in comparison to the $780 million the Internet service provider paid for it 1999.

Bundling e-greeting firm BlueMountain.com with the American Greeting Corp. subsidiary AmericanGreetings.com would seem to make AmericanGreetings.com the top e-card firm in the business; the parent corporation also owns Egreetings.com, and BeatGreets.com, all of which means it will benefit what it expects to be 100 million unique visitors annually, said Jupiter Media Metrix.

Separately, American Greetings inked an agreement with Excite@Home that will extend the relationship between BlueMountain.com and Excite@Home; BlueMountain.com will continue to be the preferred provider of electronic greetings for the Excite Network for the next three years. Cementing this is the fact that Excite@Home is buying about $3 million in advertising on the AmericanGreetings.com and BlueMountain.com Web sites to promote the Excite Network.

American Greetings said the play will also help its retail arena because of the expanded consumer base. The company currently provides online visitors with value-added coupons to redeem on greeting card purchases at its retail partners' stores nationwide, with a redemption rate on those offers.

Matt Jones, chief operating officer for Excite@Home, said the sale of BlueMountain.com is in line with the firm's plan to focus on broadband, bolster its cash position and lower operating costs.

The eye-popping difference of $745 million between BlueMountain.com's selling price on Oct. 25, 1999 and the price AmericanGreetings.com paid for it Thursday speaks volumes about how times have changed. Two years ago at this time, the dot-com world was bustling and firms such as BlueMountain.com were incredibly high-priced and similar deals were encouraged by analysts. Now, however, more and more firms are learning the harsh reality that it is tough to survive if there is no strong backer, or venture capital firm to keep them afloat. AmericanGreetings.com no doubt enjoys success in part because it has a strong offline parent.

Two years ago, BlueMountain.com seemed to be well positioned with Redwood City, Calif.-based Excite@Home, but things have changed for the cash-strapped ISP, which is $1 billion in debt. In addition to claiming it lacked enough money to carry it through the end of the year, the outfit's Chief Financial Officer Mark McEachen resigned on Monday.

In light of its debt and burdensome media properties, Excite@Home pledged to hire an investment banker to help explore financial options.