United Online keeps people connected with flowers and technology. The company's sales are largely generated by floral retailer FTD Group, which sells flowers, plants, and related products online and by phone. For the nostalgic, it operates subscription-based social networking websites, including Memory Lane, offering historic magazines, newsreels, sports highlights, and yearbook moments. United Online was created by the 2001 merger of dial-up Internet service providers NetZero and Juno Online Services to provide user-free, advertiser-supported Internet access to its predecessors. In recent years, United Online has moved to diversify its business in light of a decline in dial-up Internet subscribers.
United Online rings up more than 75% of its sales in the US. International revenues are generated by the company's operations in Europe. Of the $192.7 million in international sales in 2012, the FTD segment, primarily generated by Interflora in the UK and Ireland, totaled $157.1 million.
Beyond flowers, other activities United Online is engaged in include online loyalty marketing, through MyPoints, and Internet access and email service through NetZero and Juno. While the company got its start as an Internet access provider, today communications is the company smallest business, contributing little more than 10% of total sales. The Content & Media segment contributes nearly 20%, while the core floral products and services businesses (FTD and Interflora) represents 70% total sales.
Sales and Marketing
United Online uses television, print, and social media, outdoor advertising, and sponsorships in its branding and customer acquisition campaigns. The company spent $172.3 million on sales and marketing in 2012, up from $166.7 million in 2011.
United Online's net sales fell 3% in 2012 versus 2011, while net income plunged 76% over the same period. 2012 marked the third consecutive year of declining sales and profits for the company. Of United Online's businesses, only FTD's sales increased (up more than 4%). Despite efforts to build its business by encouraging dial-up users to upgrade to broadband service, the communications segment posted a 17% decline in sales in 2012 compared with 2011, while the Content & Media segment's sales decline 17% as well. The poor performance of Content & Media was due to a decline in paying accounts, declines at the online loyalty marketing service due to the loss of a major customer in 2011, and falling revenue from its online nostalgia services resulting from a decrease in active accounts outside the US.
Given the poor performance of its two smaller business segments relative to FTD, it's not surprising that United Online in August 2012 announced plans to split into two independent publicly-traded companies: FTD, which will include the US and international operations of the flower delivery business; and United Online, which will hold onto the lagging Content & Media and Communications businesses. The spin off of FTD is expected to be completed in the third quarter of 2013. Meanwhile, the company is exploring strategic alternatives for its Content & Media and Communications businesses.
Mergers and Acquisitions
In 2012 FTD's UK-arm, Interflora, acquired the gifts division of Flying Brands Limited, including the Flying Flowers, Flowers Direct, and Drake Algar businesses, to bolster its position in the UK. Also in 2012 Memory Lane acquired schoolFeed, Inc., the developer of a Facebook app that enables online high school networking.