Google's Big Bet, Airbus' Pain

Harold Maass

Google takes a leap of faith

Google (GOOG) shares rose after the Internet search giant announced it was buying YouTube, the popular video-sharing Web site. Google was up more than 1 percent in Europe today. (Bloomberg) The steep price -- $1.65 billion in stock -- was a reminder of the 1990s before the tech bubble burst. "It's scary," said analyst Josh Bernoff of Forrester Research. The acquisition is Google's biggest yet, and it's a gamble, as YouTube has yet to find a way to turn its heavy traffic into profits. "It's a bet," said analyst Ben Schachter of UBS Investment Research, "but it's probably a bet worth taking." (Los Angeles Times, free registration required)

Airbus gets tough

The new chief executive of Airbus warned that he would have to make "painful" job cuts in the next several months to simplify the company's "baroque" structure. Louis Gallois replaced Christian Streiff, who resigned yesterday as head of the battered European aircraft maker after just 100 days on the job. Gallois said the losses would hit management rather than blue-collar workers. He also said that despite disastrous delays caused by wiring problems in the new A380 superjumbo airliner, the jet was the "most modern" aircraft in the world. (Reuters)

A makeover at Toyota

Toyota Motor Corp. (TMC) unveiled the first new version of its best-selling Corolla in six years. The Corolla is overshadowed by trendy models such as the Prius hybrid, yet it accounts for a fifth of Toyota's sales. The makeover should help the Japanese automaker in its bid to lure new buyers looking for fuel economy and topple General Motors (GM) as the world's largest carmaker. (Bloomberg)

The market goes blue

A pro-Democrat investment company says its research shows that companies that donate mainly to Democrats do better than those that support Republicans. A new Blue Investment Management says that 76 "blue" companies -- such as Apple Computer, Google Inc., and Costco Wholesale -- outperformed the Standard & Poor's 500 index over the last years, and beat 380 "red" stocks by 15.6 percentage points. (


Google's big move

"Google has a lot riding" on its purchase of YouTube, says Catherine Holahan in BusinessWeek Online. The $1.65 billion deal could help make Google a "global media powerhouse" and open new audiences for its targeted advertising. But to remain a "good fit," YouTube will have to keep its parent protected from costly copyright infringement lawsuits over video clips it posts even though they belong to other companies.

'Tis the season

"If the fourth quarter is here," says Chet Currier in, "it must be time for a stock-market rally." The Standard & Poor's 500 index posted its biggest gains in the fourth quarter six times in the last 10 years, as investors traded furiously to get in on the rallies that often follow November elections and the beginning of a new year. But don't expect the "Fourth Quarter Cornucopia" to last forever. If enough people catch on, they'll negate it by buying in earlier and earlier.

GOOD DAY FOR: Patriotic sacrifice, as several impoverished Alaskan villages are refusing free heating oil from Venezuela because the country's president, Hugo Chavez, called President Bush "the devil." (Associated Press)

BAD DAY FOR: Economics professors, as about 30 percent of Americans think the recent decline in gasoline prices was engineered by the White House to win votes for Republicans in November -- nearly as many as the 35 percent who attribute the price break to market forces or supply and demand. (The Washington Post, free registration required)

NOTED: The recent drop in natural gas prices could reduce home-heating bills by 10 percent this winter compared to last year, according to the American Gas Association. The savings will only materialize if the weather is as mild as it was last year, one of the association's leaders said, "but weather is never the same." (The Wall Street Journal)

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