American Greetings Online to Look for Extra Cash

American Greetings (NYSE: AM) plans to sell a minority interest in its electronic marketing division, americangreetings.com, in an initial public stock offering this fall. The company offered no clues as to how many shares it will offer or how much of the company will go public, though it said it will retain a majority interest. To account for the sale, the company said it expects to take a one-time charge on its balance sheets in the fourth quarter of this year.

The news was not completely unexpected, as the company announced earlier this month that it plans to get more serious about its online business. The company is shifting the “American Greetings Online” operation, as it is called on the Web site, into a separate subsidiary to increase its focus on that effort. In addition to tapping outside investors for cash, American Greetings said it will invest more of its own money in the Internet business and will actively seek strategic opportunities and alliances to grow the site.

Online Cards Are Easy

Combining the rapid expansion of the Internet with the proliferation of color printers is the key to American Greetings’ shift into the online business world. The company’s research shows 27 million U.S. families use their computers to send electronic greeting cards or print cards from the Web to send through standard mail. That number is up 35 percent from 12 months ago.

Perhaps more importantly, American Greetings says those cards are incremental to the cards people typically buy from regular stores, probably because saying “hello” to someone online through an attractive picture and a clever poem is easy and, therefore, more appealing than standard e-mail.

“Technology may change the way we live, but it doesn’t change the basic fact that people need to communicate,” Chairman Morry Weiss said. “Helping people fulfill their needs with technology is the business and opportunity of americangreetings.com.”

More Than Just Cards

Americangreetings.com, also accessible through America Online, offers more than 3,000 electronic cards all occasions and holidays or for no particular occasion. The site features a combination of items for sale or free, such as more than 100 free postcards. Consumers can buy subscriptions to get unlimited access to thousands of American Greetings’ animated and interactive cards. For about $20, users get six months of unlimited use, or they can pay about $5 per month. The site also sells personalized printed cards, which the shopper designs and American Greetings will print and mail.

Since no card store is complete without chocolates, the Web site includes an assortment for sale from Gorant Chocolates. Through an alliance with The Learning Company, American Greetings also sells computer software it has designed to help consumers design and print their own greeting cards or create crafts incorporating popular characters from American Greetings cards.

American Greetings, based in Cleveland, is the world’s largest publicly held greeting card company.