Sun, Oct 08, 2006 - Page 1 News List

Google in talks with YouTube, newspapers say

GOOD MATCH Analysts said a Google acquisition of the popular video site made sense, considering Google's cash on hand and YouTube's brand identity


Internet search leader Google Inc is in talks to acquire the popular online video site YouTube Inc for about US$1.6 billion in cash and stock, according to several published reports.

Google and San Mateo-based YouTube are still at a sensitive stage in the discussion, the Wall Street Journal and the New York Times reported on their Web sites on Friday, citing unnamed people familiar with the negotiations.

The blog TechCrunch had reported on rumors of the acquisition talks. Google and YouTube officials declined to comment.

Analysts said a Google acquisition of YouTube would make sense for both companies if the reported talks lead to a deal, especially considering Google's US$10 billion in cash on hand.

"It's damn cheap for a company that already has a global presence," said Trip Chowdhry, an analyst with the San Francisco-based Global Equities Research. "YouTube's brand identity is no less than Google's and is no less than Coke's."

As YouTube's popularity continues to soar, she said, Google can help make sure the site's infrastructure can keep pace.

The acquisition would also immediately propel Google to the top of the online video heap. YouTube eclipsed traffic on Google's video site in February.

By July, the number of monthly visitors had grown to about 30.5 million, compared with 9.3 million for Google Video and 5.3 million for Yahoo Inc's Yahoo Video, according to Nielsen/NetRatings.

YouTube users watch more that 100 million videos daily.

Google's video service lets everyday users post clips, too, and unlike YouTube, Google also gives them the choice of selling video. All YouTube clips are free.

YouTube was founded in February last year by Chad Hurley, Steve Chen (陳士駿), and Jawed Karim, three former employees of eBay Inc's PayPal electronic-payment unit, and its chief financial backer is the Silicon Valley venture capital firm Sequoia Capital, which has invested US$11.5 million. Sequoia was also an early Google investor.

Hurley now is chief executive officer, Chen is chief technology officer, while Karim left the company to study at Stanford University, the company's Web site said.

The 25-employee YouTube is surging thanks to the increased availability of high-speed Internet connections and gadgets such as camera phones and digital cameras capable of taking video. Most of YouTube offerings are short amateur clips, although professional filmmakers, television networks and even political campaigns have posted materials.

When rumors circulated earlier this year that some major media companies were interested in buying YouTube, the company's chief executive, Chad Hurley, said the company was not for sale and a future initial public offering was possible.

Also see story:
Steve Chen, the local boy that created YouTube

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