(Image source: Forbes)


BY EVAN THOMAS

ANCHOR NATHAN BYRNE

Google held its Q1 earnings call Thursday afternoon. It was a decent quarter for the company — and Big G threw in a surprise, too.

Earnings were close to expectations. Google reported $10.65 billion in Q1 revenue, a 24 percent boost year-over-year. Net income was up 60 percent to $2.89 billion in the same timeframe.

But the bigger news came in a letter from founders Larry Page and Sergey Brin. Google has announced plans to distribute a new class C non-voting stock to existing shareholders, in effect a 2:1 stock split.

Non-voting stock means the holders of class A and B stock keep their original stakes in the company — and their control over its direction. The Wall Street Journal explains.

“The two founders, Larry Page, Sergey Brin, and Eric Schmidt, the former CEO, who’s still the chairman — they control about 70 percent of the voting power of the company. They’re worried that their voting power might be diluted over time, if they keep issuing new stock to employees and the like.”

ReadWriteWeb quotes Page and Brin’s explanation.

“‘…we have decided that maintaining this founder-led approach is in the best interests of Google, our shareholders and our users. Having the flexibility to use stock without diluting our structure will help ensure we are set up for success for decades to come.’”

But Bloomberg points out Google’s not the first big company to exercise such founder control.


“Google has done very well so far. But there was a point in time that NewsCorp did very well.… shareholders clearly want to effect change and can’t, because shareholders have so much control."

But, as Search Engine Land points out, the plan is basically a shoo-in.

“Although the creation of a new class of stock is currently only a proposal, it’s expected to have no problem being adopted at the next shareholder’s meeting, given that Page and Brin back it.”

TechCrunch suggests this is a response to other big players in the industry.

“This is an aggressive move but considering that Mark Zuckerberg will essentially be in control of Facebook (per his shareholding as outlined in the S-1) it is perhaps natural that Google’s leaders want that level of control as well.”

VentureBeat agrees. Now is the time for competition.

“By splitting its stock just weeks (in all likelihood) before Facebook’s IPO, Google is sending a message to potential investors: Bet on us. We’re a sure thing. We’ve been around for eight years, and we’re only getting more valuable over time.”

And regardless of what it means for Google’s future, a stock split has one definite upside — share prices will be a little more affordable, at least for a while.

 

Google Releases Earnings, Plans Stock Split

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Apr 13, 2012

Google Releases Earnings, Plans Stock Split

(Image source: Forbes)


BY EVAN THOMAS

ANCHOR NATHAN BYRNE

Google held its Q1 earnings call Thursday afternoon. It was a decent quarter for the company — and Big G threw in a surprise, too.

Earnings were close to expectations. Google reported $10.65 billion in Q1 revenue, a 24 percent boost year-over-year. Net income was up 60 percent to $2.89 billion in the same timeframe.

But the bigger news came in a letter from founders Larry Page and Sergey Brin. Google has announced plans to distribute a new class C non-voting stock to existing shareholders, in effect a 2:1 stock split.

Non-voting stock means the holders of class A and B stock keep their original stakes in the company — and their control over its direction. The Wall Street Journal explains.

“The two founders, Larry Page, Sergey Brin, and Eric Schmidt, the former CEO, who’s still the chairman — they control about 70 percent of the voting power of the company. They’re worried that their voting power might be diluted over time, if they keep issuing new stock to employees and the like.”

ReadWriteWeb quotes Page and Brin’s explanation.

“‘…we have decided that maintaining this founder-led approach is in the best interests of Google, our shareholders and our users. Having the flexibility to use stock without diluting our structure will help ensure we are set up for success for decades to come.’”

But Bloomberg points out Google’s not the first big company to exercise such founder control.


“Google has done very well so far. But there was a point in time that NewsCorp did very well.… shareholders clearly want to effect change and can’t, because shareholders have so much control."

But, as Search Engine Land points out, the plan is basically a shoo-in.

“Although the creation of a new class of stock is currently only a proposal, it’s expected to have no problem being adopted at the next shareholder’s meeting, given that Page and Brin back it.”

TechCrunch suggests this is a response to other big players in the industry.

“This is an aggressive move but considering that Mark Zuckerberg will essentially be in control of Facebook (per his shareholding as outlined in the S-1) it is perhaps natural that Google’s leaders want that level of control as well.”

VentureBeat agrees. Now is the time for competition.

“By splitting its stock just weeks (in all likelihood) before Facebook’s IPO, Google is sending a message to potential investors: Bet on us. We’re a sure thing. We’ve been around for eight years, and we’re only getting more valuable over time.”

And regardless of what it means for Google’s future, a stock split has one definite upside — share prices will be a little more affordable, at least for a while.

 

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