April 4 (Bloomberg) -- Photobucket Inc., a digital picture service that gained popularity along with sites such as MySpace, hired Lehman Brothers Holdings Inc. to evaluate a sale of the closely held company.

``Late last year we started getting some inbound interest,'' Chief Executive Officer Alex Welch said in an interview. ``We continue to build stand alone and we see momentum there. As long as you do that you're going to have choices along the way.''

Photobucket lets consumers post photos and link them to Web logs and social sites including MySpace and Facebook. Almost 17 million people in the U.S. visited Photobucket in February, similar to the number that went to Facebook, said researcher ComScore Networks Inc. It's one of seven among the 40 most popular sites that aren't owned by public companies.

Welch, 30, declined to say whether Photobucket is in talks or how much the Palo Alto, California-based company may be worth. TechCrunch, a technology news site, reported last week that the company may be looking for $300 million to $400 million.

Photobucket, along with sites such as YouTube and Flickr, is capitalizing on the growth of cheap digital cameras and high- speed Internet connections. As they add users, the sites become targets for bigger companies. Google Inc., the most-used search engine, bought video site YouTube last year. Yahoo! Inc. acquired photo site Flickr in 2005.

2.5 Billion Snapshots

Social networking sites account for 75 percent to 80 percent of the links to photos on Photobucket, Welch said.

``Photobucket made a name for itself for providing this virtual infrastructure for pictures,'' said Allen Weiner, an analyst at Gartner Inc., a market research firm in Stamford, Connecticut. ``They didn't do a ton of things, but what they did they did well.''

The site's members upload about 7.5 million photos and 40,000 to 50,000 videos each day. The company, whose sales office is next to a party supplies store in Palo Alto, has received more than 2.5 billion photos and stores them in two data centers in Denver.

The company, with 63 employees, generates revenue through advertising. Users paying a subscription fee of $25 a year get more storage and don't see ads.

In May, Photobucket raised $10.5 million from Trinity Ventures and Insight Venture Partners. Welch said he expects the company to become profitable in the third quarter and declined to comment on sales.

The challenge will be to build an advertising business even though users typically spend most of their time on other sites and just link to Photobucket, Weiner said.

``They are kind of a back-end provider,'' he said. ``Maybe it's a company that's built to be part of someone else's solution.''

To contact the reporter on this story: Jonathan Thaw in San Francisco at jthaw@bloomberg.net

Last Updated: April 4, 2007 13:56 EDT