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A comment on Groupon: Is Google Making a $6 Billion Mistake?. Parent comment

Re:Groupon: Is Google Making a $6 Billion Mistake? by mikeryan on Thursday December 02, 2010 @01:44PM (#1963168)
I think that Google bought YouTube for 1.5b. I think they've probably dumped at least another 500 Million into them putting the total price tag at about $2B. Assuming for a minute that YouTube could reach profitability next year, I think it would likely take at least another 5 years for Google to recoup its initial investment.

Thats now a 10 year window before the YouTube investment does anything but drag on Google's bottom line and more importantly $2B dollars that Google can't spend on another, better acquisition.

Yeah I think YouTube was a mistake for Google, its the opportunity cost that kills me. I think that money could have been better spent elsewhere.

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Re:Groupon: Is Google Making a $6 Billion Mistake? by rbarooah on Thursday December 02, 2010 @02:05PM (#1963250)
What opportunities did Google miss? They have plenty of cash, so I don't think buying YouTube prevented them from buying anything else they wanted.
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Re:Groupon: Is Google Making a $6 Billion Mistake? by mikeryan on Thursday December 02, 2010 @02:52PM (#1963427)
The opportunities may not be traditional acquisitions. They could have spent that money buying fiber backbones, 4G Spectrum, clean or solar energy plants.

I would have much rather seen google branch out more into infrastructure then into another consumer facing web play, especially one with such a long window on ROI. Its not necessarily about having the money or not so much as how could that money have been better spent.

A nice counter example, in 2007 MS bought 1.5% of Facebook for 250M at a valuation of 15B. Currently Facebook shares are selling at a valuation between 100B and 200B - split that down the middle and that MS investment is now worth $2.5B, which makes their small investment in FB look a heck of a lot better then Google's Acquisition of YouTube.

EDITS - I keep adding to this point, I apologize. Most of this comes off of realizing that Google didn't even pay cash for YouTube, it was a stock acquisition.

NOTE: I should also say as an armchair analyst I thought Google's purchase of YouTube at the time was pretty good and MS's investment at the time in Facebook was pretty bad. I've now reversed my positions on both, so take that for what its worth.

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