Google splits stock in bonus for investors, but keeps control
Revenue results at top end of estimates
Google has reported good figures for the last quarter, with revenues up 24 per cent, and is to split the company's stock, creating a new non-voting stock in the company quoted on NASDAQ.
"We recognize that some people, particularly those who opposed this structure at the start, won’t support this change - and we understand that other companies have been very successful with more traditional governance models," Larry and Sergey said in a letter to investors. "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."
The advantages for the current management team are manifest. By not diluting their own stock holdings, the founders of Google will ensure control of the company can't be wrested from them, allowing them to focus on long-term development plans, while at the same time giving a big boost to shareholders.
Ever since Apple made its dividend payout announcement, shareholders have been asking when they are going to get their own payday and Google has taken the hint. The plan allows Google to keep its huge cash pile untouched, which CEO Larry Page described as a strategic asset in the post-results conference call.
The announcement somewhat overshadowed what were rather good results for the last quarter. Revenues for the quarter grew 24 per cent year-on-year to $10.65bn and profits were $2.89bn. Revenues from outside the US grew to 54 per cent of the total, with the UK accounting for 11 per cent of the Chocolate Factory's business.
Page said the company was committed to developing long-term strategies around growth, both in terms of the overall search market, but also in the mobile and tablet spheres. Chrome now has 200 million users and he said Google+ was still growing strongly, while declining to give specific metrics on usage. The company is focused on the fundamentals he insisted, with investment following a 70:20:10 per cent split.
"We still feel most resources should go to our core business," he said. "Then we invest 20 per cent on near-term things and 10 per cent on speculation. But in the past we've struggled to have 10 per cent spent on those kinds of projects; it's generally much lower."
Google's shares rose slightly on after-hours trading. ®