AOL looks for buyers for Bebo

AOL has decided that it can’t afford to run social networking site Bebo anymore, and has announced plans to sell or close it.

It’s only two years since AOL bought the site, for $850 million – and the odds are that if it manages to find a buyer it won’t get all its money back.

Not only has AOL failed to drum up more users for the site, it’s actually lost some over the last year. It now has about five million US users, compared with Facebook’s 210 million.

Bebo  has about 40 staff, mainly in the US. The company has told them in a memo that it expects to have a final decision on Bebo‘s fate in the next few weeks.

“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. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking,” wrote Jon Brod.

“AOL is committed to working quickly to determine if there are any interested parties for Bebo and the company’s current expectation is to complete our strategic evaluation by the end of May 2010.”

The move forms part of a grneral streamlining in AOL’s business since  it was spun off from parent company Time Warner late last year. Since then, it’s announced plans to cut about a third of its 7,000-odd employees.