Google on Deal-Making Rush ?

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According to?CB Insights, a tech industry research firm, Google’s purchases in 2010 represent the most acquisition activity for the company since its inception just based on the raw number of deals either made or in the works.

In terms of acquisitions, 2010 was a banner year for the company, with a record 48 deals.

?Last year, as part of our policy, we agreed to accelerate our rate of acquisition of small companies,? Eric Schmidt, executive chairman of Google, said. ?Because it?s the fastest way to fill out some of these broader strategies.?

In 2010, Google had acquired 40+ companies including Aardvark, reMail, Picnik, DocVerse, Simplify Media, Episodic, PlinkArt, Agnilux, LabPixies, Bump Technologies, Global IP Solutions, Simplify Media, Invite Media, ITA Software, Metaweb, Instantiations, and Jambool.

It certainly has enough money to be liberal with its offers. Google has one of the largest cash hoards in the sector with some $36 billion in cash on hand.

But the company tries to exercise some discipline by adhering to a simple formula. For example, if Google finds a 10- person team with unique intellectual property, it will consider how long it would take for an in-house to build a similar product and at what cost, according to Mr. Schmidt.

?So what?s a year worth? We then calculate the value of the team plus the value of the year, and that?s the amount of money we?re willing to pay for the company,? he said. ?These are $10 million, $20 million, $30 million kind of deals.?

Google is also on the lookout for bigger deals in the nine-figure or billion-dollar realm. Last month, it agreed to acquire AdMeld, a deal he acknowledged was valued in the hundreds of millions of dollars. Meanwhile,?Hulu is said to be talking to Google, among others, about a potential takeover.

Last week, Mr. Schmidt was coy about its intentions for Hulu, the Internet video company. He only acknowledged that it?s been ?widely reported that Hulu is being discussed.? In regards to YouTube?s push into premium content, he said, ?anything involving Hulu would be incremental.?

Display ads leader

Google will buy more companies to boost its presence in the booming online display ad sector in a challenge to Facebook, even as European regulators examine its dominant web search position.

Speaking on the sidelines of the Cannes Lions advertising festival, Schmidt said the group would continue to snap up companies that specialized in handling display ads such as banners and?video.

According to a report released earlier this week by research firm eMarketer, Facebook will displace Yahoo Inc to take the biggest slice of online display ad dollars in 2011.

With that in mind, Google has engaged in a buying spree of technology and engineering talent to bolster initiatives outside of the search business, including in mobile advertising.

Schmidt said the display business had taken time to develop but said it would now look to make further acquisitions as publishers and advertisers helped it to understand which new services were required.

Earlier this month, Google acquired AdMeld for $ 400 million, the advertising optimization platform for publishers.

Sources: nytimes, searchengineland, pcmag, reuters

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