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September 8, 2005

VIA EDGAR FILING

Ms. Kathleen
Collins

Accounting Branch Chief

Division of Corporation
Finance

Securities and Exchange
Commission

Mail Stop 4-06

Washington, D.C. 20549

Re:          Response to Letter dated August 25,
2005

Dear Ms. Collins:

We are submitting the following responses to the
comments in your letter (the “Comment Letter”) dated August 25, 2005, to
Mark R. Goldston, Chairman, President and Chief Executive Officer of United
Online, Inc.  For the convenience of
the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”),
please note that we have repeated your comments 1 through 3 in italic type, and
the numbered items below correspond to the number of the corresponding comment
set forth in the Comment Letter.

1.             Comment: We note that the company
reclassified auction rate securities of $62.3 million as of December 31,
2003 from cash and cash equivalents to short-term investments on its
consolidated balance sheet.  Tell us how
you considered this reclassification in determining your disclosure controls
and procedures were effective as of December 31, 2004 pursuant to Item 307
of Regulation S-K and in your determination, it appears, that there were no
changes in internal control over financial reporting pursuant to Item 308(c).

Response to
Comment No.1:

Prior to the
company’s Annual Report on Form 10-K for the year ended December 31,
2004, we had classified our auction rate securities based on the timing of the
reset period of the interest rates – as such, those securities where the
interest rate would reset in fewer than 90 days were classified as cash and
cash equivalents and those where the interest rate would reset in more than 90
days were classified as short-term investments.
While we recognized that the ultimate maturities of the underlying
securities were long-term in nature, we viewed the interest rate reset feature
as the key factor in determining the classification of each security. At the
time, our analysis of the economic substance of these securities and the
accounting guidance in SFAS 95 and SFAS 115 resulted in our classifying auction
rate securities with interest reset dates of fewer than 90 days as cash and
cash equivalents.  Accordingly, we
concluded that the reset feature of

Ms. Kathleen Collins

Securities and Exchange Commission

September 8, 2005

Page 2

the securities
approximated a maturity date in the marketplace.  We believe that this conclusion and the
resulting classification of the auction rate securities were appropriate absent
any specific accounting guidance that would indicate otherwise.

Each quarter, we
analyze the classification of these securities by monitoring changes in the
nature of the auction rate securities and reviewing relevant updates to changes
in generally accepted accounting principles.

In
early 2005, a number of publications, including the Division of Corporation
Finance’s “Current Accounting and Disclosure Issues,” discussed specific
guidance with respect to the proper classification of auction rate securities
as short-term investments.  The new
guidance was communicated to management, including our principal executive,
financial and accounting officers, on a timely basis.  Management reviewed and discussed the issue,
including its decision to reclassify certain of the securities as short-term
investments, with the Audit Committee of our Board of Directors.  Following the Audit Committee discussion,
management concluded that such reclassification was not material.  This conclusion was made after considering
the impact of the reclassification on the face of the financial statements and
other disclosures, including the importance of the reclassification to
investors.  In addition, management
considered the following:

•                  the reclassification
caused neither a breach of any debt covenant nor any event of default under our
then-existing credit agreement;

•                  the reclassification
affects only the “cash and cash equivalents” and the “short-term investments”
consolidated balance sheets.  It does not
impact total current assets, the current ratio, working capital or other
similar financial metrics;

•                  the reclassification
does not affect our consolidated statements of operations, total stockholders’
equity or comprehensive income (loss);

•                  the reclassification
does not affect our net cash provided by (used for) operating activities or
financing activities in our consolidated statements of cash flows;

•                  the reclassification
did not and would not affect our liquidity position;

•                  the reclassification
would not affect the presentation of our condensed consolidated balance sheets
in our earnings releases as cash and cash equivalents and short-term
investments are grouped into one line item; and

•                  the reclassification
would not affect how management communicates any measure of liquidity to
investors as cash and cash equivalents and short-term investments are discussed
and grouped together for investor discussions.

Further, we
believed the reclassification would not alter an investor’s view of the company’s
liquidity position.  As such, we did not
believe that the reclassification would be important to an investor in making
an investment decision about the company, particularly given the totality and
detail of information available.

Ms. Kathleen Collins

Securities and Exchange Commission

September 8, 2005

Page 3

Based on the
foregoing, we determined that the company’s disclosure controls and procedures
were effective as of December 31, 2004.
Specifically supporting this conclusion was the fact that the
information required to be disclosed by the company in the reports filed under
the Securities Exchange Act of 1934, as amended, was recorded, processed,
summarized and reported within the time periods specified in the Commission’s rules and
forms.

One of the key controls in the company’s quarterly
financial reporting process is the preparation and review of a financial
reporting disclosure checklist.  This
checklist, which is updated quarterly for all newly issued technical accounting
literature, helps us remain current on all changes and updates in generally
accepted accounting principles.  With
respect to the preparation of Form 10-K for the year ended December 31,
2004, this checklist did include the new guidance related to auction rate
securities.  Thus, there were no changes
in our internal controls over financial reporting.

2.             Comment:
We note your use of non-GAAP measures (e.g. adjusted net income, OIBDA
and free cash flow) under Item 9.01 of the Form 8-K noted above which
exclude a number of recurring items.
Tell us the usefulness and material limitations of these Non-GAAP
measures in assessing performance.  Also,
tell us how you considered Question 8 of the Frequently Asked Questions
Regarding the Use of Non-GAAP Financial Measures to include the following
disclosures.

i.                                         the
manner in which management uses the non-GAAP measure to conduct or evaluate its
business;

ii.                                     the
economic substance behind management’s decision to use such a measure;

iii.                                 the
material limitations associated with use of the non-GAAP financial measure as
compared to the use of the most directly comparable GAAP financial measure;

iv.                                   the
manner in which management compensates for these limitations when using the
non-GAAP financial measure; and

v.                                       the
substantive reasons why management believes the non-GAAP financial measure
provides useful information to investors.

Response to
Comment No. 2:

The following is a
discussion of items 2(i) through 2(v) of the Comment Letter for each
of adjusted OIBDA, adjusted net income and free cash flow.

Adjusted OIBDA:

Adjusted operating income before depreciation and amortization
(adjusted OIBDA) is defined as operating income before depreciation,
amortization, stock-based compensation and facility-exit costs.  We believe that because adjusted OIBDA
excludes certain items that (1) do not impact the company’s cash flows
(such as depreciation, amortization and

Ms. Kathleen Collins

Securities and Exchange Commission

September 8, 2005

Page 4

stock-based compensation) or (2) management believes are not
reflective of the company’s core operating results over time, it provides
investors with additional useful information to measure the company’s
performance, particularly with respect to changes in performance from period to
period, and to assess the company’s ability to make ongoing capital
expenditures, fund working capital requirements, incur and repay indebtedness,
pay dividends and fund strategic initiatives.
Management uses adjusted OIBDA for these purposes, as well as to allocate
resources in managing the business, and we monitor adjusted OIBDA to ensure
compliance with specific financial covenants in our term loan agreement.  Our Board of Directors uses this measure in
determining certain compensation incentives for certain members of our
management team.  The economic substance
behind our decision to use adjusted OIBDA is that non-cash charges – which
include depreciation, amortization and stock-based compensation – are
significant in relation to the company’s on-going operating expenses.  For the quarters ended June 30, 2005 and
2004, these non-cash charges totaled $12.4 million and $6.8 million,
respectively, and represented 11% and 8% of total operating expenses,
respectively.  Non-recurring
facility-exit costs, which are related to the relocation of our corporate
headquarters and which at the time we did not anticipate would re-occur within
two years, of $1.6 million incurred in the quarter ended June 30, 2004
represented 17% of total general and administrative expenses.  This increase in general and administrative
expenses in the June 2004 quarter was a significant deviation from
historical levels.  For example, the
general and administrative expenses reported during each of the three quarters
ended March 31, 2004 was in the range of $6.9 - $7.0 million.  We do not believe that there are any material
limitations associated with the use of this measure, particularly when such
measure is disclosed with its most comparable GAAP financial measure.  However, a limitation associated with the use
of adjusted OIBDA is that it does not reflect the periodic costs of certain
capitalized tangible and intangible assets used in generating revenues in the
company’s business.  Management evaluates
the costs of such tangible and intangible assets through other financial
measures such as capital expenditures and purchase accounting.  An additional limitation associated with this
measure is that it does not include stock compensation expenses related to our
workforce.  Management compensates for
this limitation by providing supplemental information about stock compensation
expense on the face of the consolidated statements of operations in our
earnings release.

Adjusted Net Income:

Adjusted net income is defined as net income before the after-tax
effect of amortization of intangible assets, stock-based compensation,
facility-exit costs and the re-measurement of certain deferred tax assets.  We use adjusted net income to measure the
company’s financial performance, particularly from period to period, because it
excludes certain items that either do not impact our cash flows or which we
believe are not reflective of the company’s core operating results over
time.  We believe that this measure
provides investors with additional useful information in evaluating the company’s
performance from period to period.  The
economic substance behind our

Ms. Kathleen Collins

Securities and Exchange Commission

September 8, 2005

Page 5

decision to use adjusted net income is that non-cash charges – which
include amortization and stock-based compensation – are significant in relation
to the company’s on-going operating expenses.
For the quarters ended June 30, 2005 and 2004, these non-cash
charges totaled $8.6 million and $5.1 million, respectively, and represented
41% and 24% of pre-tax income, respectively.
Non-recurring facility-exit costs, which are related to the relocation
of our corporate headquarters and which at the time we did not anticipate would
re-occur within two years, had the effect of decreasing pre-tax income by $1.6
million, or 8% of pre-tax income in the quarter ended June 30, 2004.  The income tax effect of the adjusting
entries and re-measurement of certain deferred tax assets in the quarters ended
June 30, 2005 and 2004 were $1.5 million, or 14% of net income, and $2.4
million, or 20% of net income, respectively.
These adjustments are significant because they exclude certain items
which are not reflective of the company’s core operating results over
time.  For example, for the quarter ended
December 31, 2004, adjusted net income included a $68.6 million decrease
in net income for the elimination of the benefit recognized for a portion of
our deferred tax assets. We do not believe that there are any material
limitations associated with the use of this measure, particularly when such
measure is disclosed with its most comparable GAAP financial measure.  However, the limitations of adjusted net
income are that, similar to adjusted OIBDA, it does not include certain costs,
and the term adjusted net income does not have a standardized meaning.
Therefore, other companies may use the same, or a similarly-named measure but
exclude different items, which may not provide investors a comparable view of
our performance in relation to other companies in our industry.  We compensate for this limitation by
presenting the most comparable GAAP measure, net income, directly ahead of
adjusted net income in our earnings release and by providing a reconciliation
that clearly shows and describes the adjustments made.

Free Cash Flow:

Free cash flow is defined as net cash provided by operating activities
before cash paid for relocation costs, less capital expenditures.  We believe that free cash flow provides
investors with additional useful information to measure operating liquidity
because it reflects the company’s operating cash flows after investing in
capital assets, and excludes the cash impact of items that we believe are not
reflective of the company’s core operating results over time.  This measure is used by management, and we
believe is also useful for investors, to assess the company’s ability to pay
its quarterly dividend, repay debt obligations and generate cash flow for a
variety of strategic opportunities, including reinvestment in the business and
effecting potential acquisitions and share repurchases.  The economic substance behind our decision to
use free cash flow is that the adjustments – cash paid for relocation costs and
capital expenditures – are significant in relation to the company’s cash flows
and have the effect of (1) excluding the cash impact of items which we
believe are not reflective of the company’s core operating results over time
(non-recurring relocation costs); and (2) including the impact of items
which we believe are reflective of the company’s operating results over time
(capital expenditures).  For the quarters
ended June 30, 2005 and 2004, decreases to net cash provided by operating

Ms. Kathleen Collins

Securities and Exchange Commission

September 8, 2005

Page 6

activities to calculate free cash flow were $5.0 million, or 12% of net
cash provided by operating activities, and $2.5 million, or 9% of net cash
provided by operating activities, respectively.
We believe these adjustments may be useful in assessing the recurring
ability of the company’s operations to generate cash flow.  We do