BlueLight Says Bye-Bye to the ISP Biz

Kmart’s retail Web site operation apparently will continue, but the BlueLight Special of Internet access for only $8.95 a month is going away as the assets are being sold off, probably to United Online, operator of the NetZero and Juno Internet services.

A spokesman for Westlake Village, Calif.-based United Online confirmed that it has a contract to acquire the assets, but said its deal is subject to a competitive bidding process. Terms were not disclosed.

Kmart , whose bankruptcy filing last January made the future of uncertain, reportedly first disclosed the sale in a court filing.

At one time, was one of the fastest growing ISPs on the planet and last summer it claimed 170,000 subscribers.

But now, a spokesman was quoted by Dow Jones as saying that the focus needs to be on the core retail sales business, not running an internet service provider.

In fact, no longer exists as a URL and typing it in merely directs one to

Kmart plans to take bids for the purchase of the BlueLight ISP from all interested parties. The auction is scheduled for Oct. 7. United Online provides Internet access through its NetZero and Juno brands and would appear to be a logical buyer.

Troy, Mich.-based Kmart filed for bankruptcy protection in the Chicago U.S. Bankruptcy court and expects to emerge from Chapter 11 in 2003. Executives secured $2 billion in debtor-in-possession financing from J.P. Morgan Securities, Inc., and Fleet Securities, Inc. and vendor liens to carry the company through the reorganization process. got its start in December of 2000, with Kmart’s acquisition of free ISP Spinway (a now-defunct free ISP), immediately giving the store a nationwide audience of bargain-seekers.

United said that if it is the successful bidder, there will be no lapse in service for BlueLight’s subscribers and no need to change e-mail addresses. But a spokesman would not comment on whether the $8.95 a month rate would continue.

Earlier this week Kmart posted a loss of $377 million for its second quarter, as sales contunued to lag. The company also revealed it had discovered accounting transactions that boosted its loss in 2001 and understated the amount the year before. The Securities and Exchange Commission is investigating the discrepancies.

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