yelpThe indefatigable Michael Arrington is reporting that Google is about to (probably) pay “half a billion or more” for the company Yelp.

According to Mike, Yelp’s revenues for “2009 [will] be around $30 million and are expecting $50 million or so in 2010.” Impressive numbers, somewhat.

Now, Yelp’s last round left them with a 200 million dollar valuation, meaning that for the whole 2010 year, that round values them at four times revenue. Quite a rich multiple. Given that its last round was in 2008, I can only wonder what the multiple was.

Now, of course, Yelp is growing. If Michael’s rumors were correct, the company will grow revenue some 67% this year. Let’s go ahead and guess that Google buys Yelp for some 600 million, meaning that Google is buying the company at some twelve times revenue, and we can only guess the PEG ratio.

But, let’s guess. Let’s say that Yelp clears $5 million dollars next year, which seems a bit high, but let’s guess. At a 6700 million dollar buyout price, that puts them at a PE ratio of 120. Now, given that we are assuming $5 million profit in 2010, and that is a 67% growth over the year, gives them a PEG ratio of roughly 2.

Given that a PEG ratio of 1 is considered a fair company valuation (the whole point of this ratio is to balance out high growth startups and larger, slow growth companies. Read more here), this is a very, very steep price for Yelp.

If indeed Google pays this much, it seems, by the normal accepted metrics to be far too much. About 100% too much. We’ll see.