@Home to Buy Web’s Largest Greeting Card Company

Excite@Home agreed to acquire Web greeting card king BlueMountain.com on Monday in a deal expected to stimulate the conversion of Web viewers into buyers--the holy grail of e-commerce.

Excite@Home will pay about $780 million in stock and cash for the site, operated by privately held Blue Mountain Arts Publishing, the largest electronic greeting card company and one of the last independent giants on the World Wide Web. BlueMountain.com drew about 6.8 million users in September, making it the 15th-most-visited Web site, compared with No. 6 Excite@Home’s 11.6 million, according to Media Metrix, a Web analysis company.

Analysts suggested that Blue Mountain gives Excite@Home an edge over competitors such as Yahoo and Lycos.

“The acquisition makes a lot of sense,” said Frederick W. Moran, an analyst with Los Angeles-based investment bank Jefferies & Co. “Each of the major Internet portals is attempting to find ways to differentiate their offerings not only to attract viewers but to keep them coming back.”

Loyalty is especially valuable in this context because every greeting card represents a “commerce event”--such as a birthday or anniversary--for both sender and recipient, said Mark Stevens, executive vice president of Redwood City, Calif.-based Excite@Home.

But the ultimate success of the BlueMountain acquisition will depend on Excite@Home’s ability to use its other technologies and services to turn BlueMountain’s potential shoppers into buyers.

BlueMountain had been the subject of takeover rumors for weeks, partly because the site has needed a partner to provide the infrastructure--shopping, calendar, e-mail, financial services and the like--to convert its greeters into shoppers.

Excite@Home offers such a mix--along with a unique opportunity. The company’s controlling shareholders are a consortium of cable TV operators that offer Excite@Home’s other large business, the @Home high-speed Internet access service, over cable TV lines. Stevens said Excite@Home, whose largest shareholder is AT&T; Corp., sees BlueMountain’s largely middle-aged, home-owning users as natural subscribers to the @Home service.

But even if @Home gains many such conversions, analysts said the selling price--which will grow to more than $1 billion if Boulder, Colo.-based BlueMountain meets performance goals related to audience size, cards sent and other measures--seems high for a Web company thought to boast only a modest revenue stream.

Excite@Home shares gained 75 cents in Nasdaq trading Monday, closing at $39.81.