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After paying $850 million for Bebo in 2008, AOL is considering selling it or shutting it down.

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INTERNET Bye-bye Bebo?

AOL Inc. is evaluating the sale or shutdown of social-networking Web site Bebo, less than two years after spending $850 million to buy the San Francisco business. The New York Internet company said it plans to finish a strategic review by the end of next month and may exit the site this year.

“Social networking is a space with heavy competition, and where scale defines success,” AOL said in the statement. “Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space.”

AOL, which was spun off from Time Warner Inc. in December, said it isn’t in a position to fund a turnaround for Bebo. The site has lost ground to bigger social-networking rivals Facebook Inc. and News Corp.’s MySpace since Time Warner bought Bebo in May 2008.

COMPENSATION CEO’s pay cut at Gap

The chairman and chief executive of San Francisco’s Gap Inc. received 2009 compensation valued at about $5 million, down 7 percent from a year ago, according to an Associated Press analysis of data filed with regulators Tuesday.

Glenn Murphy, 48, took a temporary 15 percent pay cut in his base salary during the year – from $1.5 million to about $1.3 million – as part of a company-wide effort to cut costs. That reverts back to $1.5 million in the current fiscal year.

TELECOMMUNICATIONS AT&T fixes Oakland cable

AT&T said it has repaired a cable that was cut Monday afternoon in Oakland, interrupting voice mail for an unknown number of customers in the Bay Area.

The company said that by 12:40 p.m. Tuesday it had restored service to all of the affected customers. Psychologist Michael Bader of San Francisco said his office voice mail was off for roughly a day.

PATENTS Rambus appeals

Rambus Inc. told an appeals court its policy for in-house document destruction shouldn’t be used to bar the company from pursuing patent royalties from Hynix Semiconductor Inc. of South Korea and Micron Technology Inc. of San Jose.

In arguments before the U.S. Court of Appeals for the Federal Circuit in Washington on Monday, the Los Altos designer of high-speed computer-memory chips said it destroyed documents as part of a legal practice to reduce stored paper. It denied allegations by Hynix and Micron that its purpose was to hide information that could be used to defend against patent-infringement claims.

Tom Abate and Chronicle News Services

This article appeared on page D – 3 of the San Francisco Chronicle