updated 04:35 pm EDT, Thu April 12, 2012
Google Q1 2012 is surprise hit
Google beat expectations for its results on Thursday and simultaneously set out plans to create a new kind of stock to keep its management in place. The company saw its mostly ad-based revenue up 24 percent, to nearly $10.7 billion, and its net profit even higher, up 61 percent to $2.89 billion. While the company didn't delve into specific factors, it was thriving both on its core business and on the "momentum from the big bets" on Android, Chrome, and YouTube, CEO Larry Page said.
No updates were given on Android activations, which had previously reached 850,000 per day.
In tandem with the news, the company posted a letter detailing a proposed new class of non-voting stock in the company. Billing it as a form of two-for-one stock split, the move gave each share a matching, non-voting share. The method would let Google more easily offer stock-based compensation but in a way that would minimize the risk of a coup challenging founders Page, Sergey Brin, and executive chairman Eric Schmidt.
If any of these executives wanted to sell any of their own non-voting shares, they would also have to either sell an equal number of their Class B voting shares or convert them into Class A.
Page argued that the non-voting extension was meant to keep Google's founders in charge. In an indirect condemnation of other companies, he noted that he and the other early executives had always been willing to make deep investments with the realization they might only pay off years later. Keeping the same amount of actual share voting power would prevent "short-term pressures," the CEO said, alluding to a tendency of investment groups to only care about quarterly gains and create overly conservative or shortsighted companies as a result.
"We have always managed Google for the long term, investing heavily in the big bets we hope will make a significant difference in the world," he explained. "Some of these bets have been tremendous, funding our activities and generating significant gains for our shareholders. Others have been less successful. But the ability to take these kinds of risks has been crucial to Google's overall success and we aim to maintain this pioneering culture going forward."
While just a proposal, a stock bias that gives Brin, Page, and Schmidt majority control guarantees that the measure will pass.
The share split came just as Google has at least temporarily regained its lost stock price superiority over Apple following a sudden run on Google stock ahead of results.