Online photo sharing startup Photobucket is in play and there's a debate about its worth. This reminds me of the MetaCafe takeover speculation late last year where a high buyout price ($225 million) was thrown out into the blogosphere and nothing much came of it. In Photobucket's case, the figure suggested to TechCrunch by PhotoBucket's bankers is $300 million.

Photobucket's lack of destination site status limits the multiples it can demand in a negotiation compared to say, what MetaCafe or Bebo could ask for. Sure, it still has room to grow and it's done an admirable job of building toward a solid business, but it neither benefits from the network effect nor does it lock in its users as tightly as a social network such as Facebook or MySpace do.

I don't think Photobucket will be bought for $300 million now. Ten months ago when the Palo Alto company announced a $10.5 million second round fundraising from Trinity Ventures, I predicted Photobucket could achieve a $100 million trade sale within 18 months. Since then, the company's revenue has grown, but so too, has its costs. I may have underestimated its growth potential last May, but, based on a loss-making company with $9.3 million in 2006 revenue, I think what a corporate acquirer would pay is closer to $100 million than $300 million.

And after this leak, it would be hard to accept anything less than $300 million. Which may lead Photobucket back to Sand Hill Road for continued support of its money-losing operations.

For more skepticism about Photobucket's price tag, see:
HipMojo
Valleywag

Tags: photobucket, trinity+ventures, photos, vc, venture capital