We pointed out the other day that Google had bought YouTube for about 1% of its equity. The Big Picture takes the analysis one step further, noting that after the rise in Google's share price following the acquisition, Google essentially picked up YouTube for free.

And if the stock keeps climbing, well, then Google picked YouTube up for less than nothing. The market is paying Google to buy YouTube.

Google Buys YouTube -- for Free [The Big Picture]

YouTubers have begun posting videos reacting to the Google acquisition. Despite fears that getting scooped up by a big company might tarnish the YouTube's image in the minds of its most loyal users, the overwhelming majority of these videos seem very positive. Far from crying "sell out," most users seem happy with the Google buy-perhaps hoping that their little corner of fame on the internet will become a little bit bigger.

The video we've embedded above is actually quite imaginative in its vision of what GoogTube might look like.

Chad and Steve talk about Googtube. They are so goofy and normal it will make you hate them even more. Because It. Could. Have. Been. You.

We have to admit that sometime in 2001 we became convinced that the era where you could start an internet company and two years later sell it for hundreds of millions was over. After the first internet bubble burst we assumed that companies located on WWW street would forever be discounted by big money burned in the bubble.

But we were wrong. A smarty pants website can still make you rich, especially if it's user driven and counts as two-point-oh. Does this make sense? Mark Cuban, at least, think Google is kind of dumb for buying YouTube.

It will be interesting to see just how google reconciles selling videos like Crazy in Love from Sony, when the same video is available as a user upload for free from youtube.

it will be interesting to see how Fox reacts to this deal Fox owns content. Neither google or YT does. Could Fox, the owner of Myspace put GooTube in a huge hole by being legally aggressive and going after every video of Stewy from Family Guy , American Idol, any of their TV shows ? The same with their movies. Beyond just Gootube, (and I mash them together with nothing but love :), Fox could make them look real bad by using supoaenas to go after individual Gootube users. Fox is also a stickler for DRM, they aint gonna like having their content floating DRM free around the net. Sure, myspace would have to clean up some of their own videos, but it would be a far easier chore than Gootube has. Now that would be a celebrity lawyer match worth watching.

I still think Google is crazy [BlogMaverick]

Okay. The conference call just ended. There will no doubt be lots of commentary on the deal over the next few days and weeks. Here's our quick take on the call.

Search: Sergey Brin twice emphasized the "search" potential of including video. It's clear that Google's founder is still very focused on Google's core competence. That should be reassuring to Google shareholders who might be worried the company is going astray with recent product developments and acquisitions.

Social Networking: Google has been only moderately successful in social networking. Orkut never really took off. Dodgeball (which was founded by a friend of DealBreaker) is amazingly useful to its users and is popular among certain cutting-edge urban users but hasn't yet deeply penetrated our broader cultural fabric. YouTube took off in part because of its social networking potential. Google seems interested in further penetrating this internet space.

Independence: YouTube is keeping its name and will continue to be run as a separate business unit. GoogleVideo is not going away either, and plans to further integrate it with Google's main search will continue. So YouTube users probably don't have to worry that they are going to have to open Google user accounts anytime soon.

Advertising: The potential for integrating Google's advertising capabilities with YouTube were downplayed on the call, treated as definitely secondary to integrating the power of Google's search capabilities with YouTube.

Copyright: This was one of the big things that led some, like Mark Cuban, to say that only a moron would buy YouTube-so much of the most popular content on YouTube is owned by others and posted on the site in violation of the owner's copyright. Of course, today's deal comes only hours after YouTube announced content sharing deals with Sony BMG, Universal, and CBS (and Warner a couple of weeks ago). With Google's muscle behind it, YouTube should now be even more attractive to producers of video content who are looking for new ways to bring their content to users over the internet, according to the GoogTubers.

Yep. It's on.

Google Inc. (NASDAQ: GOOG) announced today that it has agreed to acquire YouTube, the consumer media company for people to watch and share original videos through a Web experience, for $1.65 billion in a stock-for-stock transaction. Following the acquisition, YouTube will operate independently to preserve its successful brand and passionate community.

It's a bit unusual for Google to do this as an all-stock deal. But it makes sense here, where any cash component would probably create huge tax liabilities for YouTube's owners. It also means that Google just picked up YouTube for about 1 % of its equity. That's the power of a $125 billion market cap.

To access the conference call, dial 800-289-0572.

Google To Acquire YouTube for $1.65 Billion in Stock [Google Press Center]

DealBook reports this morning that Google is in talks to acquire video sharing site YouTube for around $1.6 billion. Soon Sergey may have LonelyGirl15 all to himself.

Rumor: Google in Talks to Buy YouTube [DealBook]

For a few moments last week Google's stock dropped $350. Don't get too excited. It was a mistake. Those guys are still making a fortune selling "tiny classified ads."

On Thursday, trading in Google wrapped up the day at $387.12 a share at the usual closing time of 4 p.m. A minute after the close, Google announced its second-quarter results: better than expected earnings, but decelerating revenue growth from the prior quarter.

At 4:02 p.m., in after-hours trading, Google's shares got creamed, initially tumbling to as low as $364, down more than $23 a share from its close, but then rallying back to $391, for a gain of nearly $14.

At about the $391 price point, an order originated on Instinet-ATS (a Nasdaq company) that triggered trades between 4:10 p.m. and 4:12 p.m. at a price as low as $38 (representing a drop of almost $350 a share from the close). In brief, someone from a Nasdaq member firm punched in an erroneous figure to commence a trade.

That led to a host of subsequent trading at $38, as well as at $37.81, $37.82, $37.99, $38.02, $38.03, and $38.05.

Steve Sailer discovers the secret of Google's money machine--its highly intelligent Adsense algorithm for assigning ads to websites. For instance, right now isteve.com is running the following ad:

Beirut Hotels Last minute, discounted hotels in Beirut. Rates up to 70% off! www.hotelbrowser.biz

Why Google is worth a 100 gazillion gigabux [isteve.com]

The Washington Post has the lowdown on Google founder Sergey Brin's trip to Washington. It doesn't seem to have gone that well.

While Brin aides said he met with at least four senators, he did not see Senate Commerce Committee Chairman Ted Stevens (R-Alaska), whose committee has the greatest sway over the telecom legislation that Brin is trying to influence. The offices of four other senators said they could not arrange meetings, noting that they were approached late last week.

Surely someone should have told Sergey Brin that almost no Senators will actually know who he is. Senators don't recognize names unless they've seen them a six or seven times on campaign donation checks.

Google introduced a spreadsheet application today. It's available on a limited, first-come, first-serve basis by signing up here. Early reports tout its collaborative and portability features. Multiple users can revise the spreadsheet using a chat function and since the spreadsheets are stored on Google servers, they can be accessed from anywhere by any authorized users.

Henry Blodget suspects that Google's apparent drive to compete with Microsoft's Office is a bad idea. Dan Dodge doesn't think Google's word-processing or spreadsheet applications even come close to being competitive with Microsoft's products.

DealBreaker's take? We're waiting for Google to accept our bid to sign up for the new product.

We suppose you can read the reporting on today's Google conference call from Reuters or CNNMoney. They are good enough as far as they go. But the most complete treatment comes from John C. Ogg on the 24/7 Wall Street blog. It's little more than a hastily written transcript but its got the goods on who asked what, which is always one of the best parts of these calls.

Google's Investor and Analyst Conference Call [24/7 Wall Street]

Update: Seeking Alpha has the complete transcript.

In the continuing Yahoo! Finance vs. Google Finance vein, a reader offers the following screenshot from Yahoo! analyst day presentations:

(Click for large version.) Our conclusion: There seems to be more blue. Recommendation: Neutral. Also: Yahoo! will have "widgets" as well.**

** Obvious pandering to bloggers. Not that we mind being pandered to...

Related:
Yahoo! Finance: 3; Google Finance: 0
Yahoo! Finance: 2; Google Finance: 0
Yahoo! Finance: 1; Google Finance: 0

Henry Blodget explains.

So maybe the outlook for free cash flow growth isn't as bad as it seemed. Unless Google plans to become a REIT, approximately $750 million of the $1.5 billion in CAPEX estimated for this year should disappear. When/if it does, this will provide a nice lever for cash flow acceleration.

Where Google's CAPEX is really going [Internet Outsider]

In the continuing vein:
Yahoo! Finance: 3
Google Finance: 0

Previously:
Yahoo! Finance: 2; Google Finance: 0
Yahoo! Finance: 1; Google Finance: 0

Equity Private, still on the Yahoo vs. Google beat, notes (while keeping tabs on KKR's IRR on the Sealy boyout) that Google Finance doesn't yet recognize the Sealy ticker. Someone's asleep (ZZ) at the wheel.

$$$ Credit where credit's due: we all have Overstock's Patrick Byrne to thank for making conference calls fun again. But let's face it: they're even better when you record them and have them read by monkeys in wigs and sunglasses. (See also here and here.)

$$$ What's the first result when you type "finance" into Google? Uh... Yahoo! Someone's getting fiiiiiired. [via Going Private]

$$$ The 80,000 volt electric briefcase. Where the hell was this when we were dropping off piles of cash on behalf of Equatoguinean dictators in Dupont Circle for Riggs Bank in '04? Now they tell us! [via BoingBoing]

$$$ The first rule of Hedge Fund Polo Club is that no one talks about Hedge Fund Polo Club.

The launch of Google Finance this morning is undoubtably painful for Yahoo!, which has been experiencing pageview declines on Yahoo! Finance as of late. (We might as well blame Lloyd Braun. Everyone else does.)

In other news, Yahoo! employees don't know how to park their cars. You decide which is the bigger tragedy.

Google Finance [Google]

An Open Letter to Everyone Who Sold Massive Quantities of Google (NASD: GOOG) Today, Driving the Stock Down 27 Points:

You probably should not have owned the stock in the first place if it took an overt statement from the CFO to get it through your heads that search is no longer the primary area of growth for Google. If that's news to you, it means that you've somehow missed the 1,827,384 articles, white papers, blog posts, about Google advertising, projects in Google R&D, Google's competitive position vis-a-vis non-search properties, etc. And we're not sure how you could have possibly done that, but we're guessing you've missed out on a few other things in the meantime:

· Philip Morris: No longer just cigarettes! (No longer called Philip Morris, even!)
· IBM: Revenue for mainframes down!
· Enron: No longer exists!

You're welcome.

Stocks Fall On Signs of Weakness in the Economy and at Google [NY Times]