[Eric]

A great ZDNet column put forth a thought provoking piece. The authors premise is that Google gave themselves a deal by buying YouTube in stock instead of cash. This looks like it means Google found a way to get a discount at YouTube's expense.

From the deal details, we know the total price is $1.65B in stock. The stock price and thus the number of shares to be issues will be set by a 30-day average ending two days before closing.

Thus if the market is pushing GOOG up, that means the number of shares issued to Youtube.com goes down, thus minimizing the dilution.

So the current GOOG owners are getting the benefit, at the expense of the youtubers. The market is correcting for the proper youtube price.

Should we expect anything different from Google?

[GuyKels]

I wouldn't expect anything different from Google. They know their stuff.

Nonetheless, I don't think the youtubers are really losing on the deal. If they wanted cash, they will lose on the deal because their stock will trade at less than its dollar-value. However, if they wanted Google stock, then they will get more stock then if they had taken the money and tried to buy stock.

[Eric]

Originally Posted by GuyKels

I wouldn't expect anything different from Google. They know their stuff.

Nonetheless, I don't think the youtubers are really losing on the deal. If they wanted cash, they will lose on the deal because their stock will trade at less than its dollar-value. However, if they wanted Google stock, then they will get more stock then if they had taken the money and tried to buy stock.

Good point. Plus, I'm hearing that Google is having to pay millions and millions of dollars to record labels and copyright holders with regards to the YouTube purchase.