Digital Streets

As I am sure you know, Google is acquiring YouTube. The deal makes sense as it definitely adds a great avenue for Google’s internet advertising strategies. Where I start to get a little lost is the where the price tag came from. $1.65 billion (yes, billion) in stock is an astronomical figure. It immediately reminded me of the dotcom bubble (that burst) when the tech stocks were so incredibly overvalued. I have no doubt that YouTube is definitely worth a considerable amount. It is one of the largest and fastest growing online video communities on the net. But $1.65 billion? I would be very interested in what the method for establishing the value for the acquisition was, how did this make sense to the Google’s shareholders? If someone can explain this to me, I would greatly appreciate it. Right now I fear that there will be future acquisitions with over-inflated price tags happening over the next year. I hope I am wrong, but I look back at how the analysts look at tech companies and I am not very optimistic. What about you?