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October 11, 2006

Microsoft CEO Ballmer: Is YouTube really some permanent, long-term thing?

posted by MR WAVETHEORY at 10/11/2006 06:01:00 AM
Great interview between Microsoft CEO Steve Ballmer and Businessweek. They talk about the YouTube deal and FaceBook. Ballmer seems to question whether the YouTube and FaceBook are fads.
[You've got to ask] could Google do whatever it is they're hoping to buy without paying $1.6 billion? Is YouTube really some permanent, long-term thing, or is it a fashion? I'm not saying it is a fashion. But every time we do valuations, I wonder if we can afford to keep this hot for 10 years. I'm sure somebody at Google has got to do the same analysis, because even $1.6 billion is more than 1% of their market cap.
He brings up a great point which is there are very few companies that can afford to pay over $1 billion for Web 2.0 companies.
Look, there are only [a few] buyers who can buy anything over a billion dollars in this space. There's us. There's eBay (EBAY). There's Yahoo. And there's Google. I don't think there's anybody else. Even Amazon (AMZN) has a market cap of only $13 billion. I don't think they're going to do too many $1 billion deals. So you've got maybe four guys who will buy in that range. And there's the public market.

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