Google Returning to Acquisitions, Hiring
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On the heels of a solid financial performance that topped analysts' expectations for the third quarter, Google is poised to ramp up its rate of acquisitions and begin hiring more aggressively to support its growth.
"We're open for business in making strategic acquisitions both large and small," CEO Eric Schmidt said today on a conference call with analysts. "Because of what we've seen, we have the confidence to be optimistic about our future and we're going to invest as a result."
Schmidt said that most of the acquisitions would be of smaller firms that specialize in specific technologies that could augment Google's (NASDAQ: GOOG) offerings in areas like search, enterprise services and mobile.
As to buyouts of larger firms on the scale of YouTube or DoubleClick, Schmidt said, "They're going to be quite infrequent."
He hinted that acquisitions of smaller firms could be expected at a rate of roughly one a month, while larger buyouts might come only once every year or two.
Most recently, Google ponied up $106.5 million for On2 Technologies, a firm specializing in video-compression technology in a deal that is still pending.
That acquisition was widely seen as a play to improve the technology underpinning YouTube, the runaway leader in online video that has proved famously difficult to monetize.
But the executives said that YouTube is fast becoming a must-buy for advertisers, claiming that 90 percent of the firms in AdAge's top 50 list have run successful campaigns on the site.
"We're really pleased about YouTube's performance," said CFO Patrick Pichette. "YouTube is on its path to profitability in the not-too-distant future."
He declined to offer specifics about YouTube's revenue, but said that Google is now monetizing more than 1 billion video views a month on the site.
The executives were similarly bullish on Google's foray into the wireless sector, particularly with the growth of its open source Android operating system.
Android, which made its first appearance on a smartphone last September, is now available on 12 devices in 26 countries, and is supported by 32 wireless carriers, Schmidt said. Android is on tap for numerous additional roll-outs throughout the fourth quarter and into 2010.
Hiring freeze is over
The executives on today's call made it clear that the hiring freeze Google implemented in response to the recession is over. They did not offer a quota of how many employees the company is looking to bring on, but said that the hiring would be split roughly evenly between engineers and salespeople.
"While there's obviously a lot of uncertainty about the pace of the economic recovery, we believe the worst of the recession is behind us," Schmidt said. "We're very optimistic about the future."