Google warming up to YouTube and Yahoo

Google expects to launch new products for its YouTube Web video service in the next few months and sees reason for closer cooperation with Yahoo, chief executive Eric Schmidt said on Thursday.

Schmidt has said getting the video sharing site to make money is the Web search company's top priority for the year. He did not give details of the products, however, and they are not even in initial, or beta, testing.

At the company's annual shareholder meeting, Google co- founder Sergey Brin said YouTube and DoubleClick, an online advertising company bought by Google earlier this year for $3.1 billion (£1.6 billion), are still small businesses compared with its core search and advertising business.

"They both have potential, but for it to be a sizable part of our revenue, you're going to have to wait at least a couple of years," said Brin in response to a question about when those acquisitions would make a significant contribution to the company's bottom line.

Google bought YouTube for $1.6 billion (£0.8 billion) in 2006.

The Web search leader played a large role in the takeover battle between Microsoft and Yahoo. During a two-week test, it sold search advertisements on rival Yahoo last month as part of Yahoo's attempt to find an alternative option to Microsoft's offer.

Schmidt said the trial run provided good reason for the companies to discuss cooperation, but there was no deal yet.

"We view the test as successful," he told reporters before the Web company's annual meeting. "That's a good basis to talk to Yahoo some more."

The Google chief executive, speaking later at the shareholder meeting, said the company will continue to growth faster outside of its home market. Google generated 51 percent of its revenue outside the United States in the March quarter, but Schmidt said he expects that figure to grow over time.

Without giving a specific time frame, Schmidt said he expects 65 percent of Google's revenue to come from abroad. Eventually, non-U.S. revenue could be even higher.

Google co-founders Brin and Larry Page also fielded a request from one shareholder who asked the pair not to split the company's stock, which closed at $583 (£297) on the Nasdaq.

"I think that's the first time we've had that request," Page said with a chuckle.

Brin played the straight man: "We have had no problem honoring that thus far and I don't expect that anything will change in that respect."

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