Yes, Google is good for the money. The search-engine giant's balance sheet is flush with $9.8 billion in cash and short-term investments. If anything, it's surprising that Google hasn't been as aggressive as its online rivals and media conglomerates in acquiring key Internet properties after tapping the secondary markets for greenbacks a couple of times since going public in the summer of 2004.
With the exception of doling out $1 billion for a 5% stake in Time Warner's
The knocks on YouTube have been the problems of monetizing video streams, as well as the battle against content providers who often have their copyrights violated through unauthorized uploads. YouTube has turned to a variety of advertisers, including Google, and media sponsors to help cash in on its popularity without having to pad its videos with actual visual ads. What we don't know is whether that will be enough to offset the high costs of running a video site in the first place. Last month's deal with Warner Music Group
However, Google needs YouTube even if it's not an instant cash cow. It recently replaced the Froogle tab on its landing page with Video. That makes it a high priority for Google, and it can't afford to fail. Google Video is a nice try, but it's no YouTube. Snapping up YouTube would have Google in the clip-culture driver's seat with an online sensation that is serving up well over 100 million videos a day. In Google's mind, its success with its AdWords program proves that if anyone has the muscle to monetize something, it must be Google. In the past, that meant striking up ad deals. However, with buyout binges taking place in the boardrooms of many of Google's competitors, the best way to guarantee an ad partner seems to be to swallow it whole.
Good luck, Google. I guess we'll all be watching YouTube to see if any news breaks over the weekend.
Time Warner and eBay are Motley Fool Stock Advisor recommendations.
Longtime Fool contributor Rick Munarriz is a huge fan of Google, and it would be his home page if it weren't for Fool.com taking up that piece of real estate. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.