In a financial sense, Google's acquisition of YouTube has never made a lot of sense; the site, which sold for $1.65 billion, hasn't even turned a profit on a quarter-to-quarter basis yet. But according to a prominent analyst, that's about to change.
Doug Anmuth, who works for Barclays Capital, said today in a note, "[I]n 2010 we believe YouTube will start contributing positively to EPS. . . . [W]ith YouTube monetizing more than 1 billion video views every week, and with strong sell-out rates on its home-page from larger advertisers - we note 90% of the top 50 Ad Age have advertised on YouTube - we believe the site can profitably take share of the branded display & video market."
Anmuth then shared a couple of concrete numbers, continuing, "We project YouTube to generate $700 million in revenue in 2010, up 55% Y/Y."
While $700 million might be good or bad, depending on what scale it's measured on (remember, Google's market cap is in the neighborhood of $190 billion), the 55 percent figure is great. Entities that have been around for more than a few years don't often pull off that sort of dramatic improvement, and it would be even more impressive given the current economic climate.
Hat tip goes to Peter Kafka.