America Online said Tuesday it plans to sell or close Bebo, the social networking site it acquired two years ago, by the end of May.

"As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success. Bebo, unfortunately, is a business that has been declining," AOL said in a statement.

In the article on MSNBC.com Bebo then goes on to comment that it would 'require significant investment in order to compete' and that the company was 'not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking'.

AOL bought Bebo in March 2008 for US$850 million.

The article in MSNBC.com goes on to report that Bebo had 12.8million unique visitors in February according to comScore representing a dramatic decline of 45% since February 2009. In comparison Facebook had 462 million unique visitors in February 2010 up 68% from 2009.

Traffic to other social networking sites in February 2010 were (according to comScore):

MySpace - 110 million
Twitter - 69.5 million
Orkut - 49.8 million
HI5.com - 39.6 million

Yet another good reminder that we should not put all our social networking eggs into one basket!

Interesting news too since on the 2 April it was reported that former Bebo President is Joanna Shields is to join Facebook EMEA - http://www.krishna.me/former-bebo-president-joanna-shields-joins-fa