Google - YouTube pieces are all in place
Record Quarter has Search Giant Predicting Profit for YouTube
Oct 16, 2009
Google yesterday reported it had recorded its best quarter in history, showing an increased profit of 27 percent over a year ago. The search giant's CEO, Eric Schmidt, told analysts during a conference call: "We believe the worst of the recession is behind us."
Google's $5.94 billion revenues for the quarter ending Sept. 30 represented a 7 percent increase from the third quarter in 2008. Its record net income was $1.64 billion, or $5.13 a share, up from $1.29 billion, or $4.06 a share in the 2008 third quarter.
The search giants said net cash from operations in the third quarter of 2009 was $2.73 billion, compared with $2.18 billion in the third quarter of last year.
Google says YouTube ‘on the path to profitability'
A year ago this month, Google spent $1.65 billion to acquire video hub YouTube. The company has been much maligned for the purchase, with pundits criticizing the amount it paid and harping in the company's apparent inability to monetize the popular hosting site.
Google execs may have put an end to the discontent during the past week.
Last week, YouTube co-founder and CEO Chad Hurley announced the company was seeing more than a billion hits a day on its website, with more than 30 billion video views a month.
Yesterday, Google chief Schmidt said the demand for advertising on YouTube was increasing, and said display ads, especially those on YouTube, performed well last quarter.
The video sharing site, Schmidt told investors, is "now on a trajectory that we're very pleased with... we actually see a very profitable and good business for us," reported the Wall Street Journal.
Google execs told analysts that YouTube's "monetized views" had more than triple in the past year.
Making YouTube Pay Off
Google currently uploads nearly 15 hours of video every minute, the company said, most of it non-professional quality. The company doesn't anticipate that kind of video becoming a profit center and said it won't spend too much time focusing on ways to monetize that content. Instead, Google will focus on attracting mainstream advertisers to its increasing inventory of long-form video
TechCrunch reports that Nikesh Arora, president of global sales for Google, said nearly all of the top AdAge advertisers have experimented with buying space on YouTube and said preroll ads — those 10-30 second commercials before a video starts — are increasingly popular with advertisers, and with the general public that has accepted them in exchange for quality content.
"We have been pretty much been able to sell homepage ads across the world, 90 percent of U.S. homepage ads were sold out in the quarter," Arora said. "We finally got all the pieces in place."
Said CFO Patrick Pichette: "We are really pleased about YouTube's performance (it's) on its path to profitability in the not-too-distant future. We are monetizing more than a billion video views every week on YouTube."
Schmidt also reiterated that Google would continue to be on the lookout for new acquisitions of companies that fit its business plan, although he said it was unlikely to pursue a company as large as pricey as YouTube in the near future.
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