Google CEO likely to stick to small acquisitions as it increases spending

On The Call: Google CEO Eric Schmidt

Google Inc.’s success has left the Internet search leader sitting on a pile of cash — $22 billion at the end of September. Executives say they are ready to spend more money to take advantage of what they believe will be even better days ahead.

That will include buying other companies, although perhaps not on the scale of Google’s $1.76 billion acquisition of YouTube in 2006 or $3.2 billion purchase of DoubleClick last year. Google CEO Eric Schmidt provided some insights into his thinking Thursday in a third-quarter earnings conference call with investors.

QUESTION: Will Google be doing a large transformative acquisition or will its policy still be to make small technology-oriented acquisitions?

RESPONSE: The way we think about acquisitions is we have historically done an acquisition perhaps one a month or so. And those are typically small and they are typically complete in offering. They are typically technology-intensive. They are not very expensive in the scheme of things …

We’re certainly looking for larger businesses to buy, but in those cases there would have to be some specific — some major, major user base that we do not currently have access to, and so they are going to be quite infrequent.

So if you think about it, our two largest have been DoubleClick and YouTube, both of which look as though they are going to be incredibly successful. But the integration costs, the acquisition costs itself was quite significant.

So those will be relatively rare and if I were to estimate the frequency, it’s hard to say, but it’s certainly not monthly. Maybe every year or two. But certainly not every month.