Google Profit Soars, Plans for Stock Split
Google on Thursday delivered a double-shot of good news to investors, announcing soaring profits and plans for a long-desired stock split that will make its shares easier to trade.
Google reported a profit of $2.89 billion on revenue of $10.65 billion in the quarter ended March 31.
The performance trounced that seen in the same period last year when the California-based company had a net income of $1.8 billion on $8.57 billion in revenue.
"Google had another great quarter," said company co-founder and chief executive Larry Page.
"We also saw tremendous momentum from the big bets we've made in products like Android, Chrome and YouTube."
Google's founders said the board is supporting a plan to create a new class of non-voting stock that would be doled out in the form of dividends to existing shareholders.
The intent, according to Page, is to give investors a long-desired two-to-one stock split while keeping founders Page and Sergey Brin in command.
"We have protected Google from outside pressures and the temptation to sacrifice future opportunities to meet short-term demands," Page and Brin said in a letter to investors.
"We have a structure that prevents outside parties from taking over or unduly influencing our management decisions," they added.
Approval of the stock split by shareholders was considered a foregone conclusion since Google's co-founders and chairman Eric Schmidt together have controlling interest in the company and support the move.
Google's stock price has soared since it went public in 2004, but the company shunned splitting shares to appeal to people interested in investing in the firm for the long haul, and let the founders call the shots.
"While the decision was controversial at the time, we believe in hindsight that it was absolutely the right thing to do," Page said in an earnings conference call.
Creation of non-voting shares was motivated, in part, by control of Google being diluted by awards in the form of employee stock compensation and moves by Google's founders to sell off some of their stakes.
"We need to ensure that Google remains a successful, growing business," Page said. "This proposal will only have an effect on governance over the very long term."
During the earnings call, Page and other executives highlighted momentum of Android-powered mobile gadgets; video-sharing website YouTube, and the company's budding Google+ online social network.
"Google+ is truly at the heart of our efforts to create a simple, more intuitive experience for all of our users," Page said.
He portrayed Google+ as being a "social spine" giving backbone to the company's array of popular online services as well as being a destination for socializing on the Internet.
Page said that "well over" 170 million people have signed on to Google+ and that the number of people using the company's Chrome browsing software has topped 200 million.
About 850,000 smartphones or tablet computers powered by Android software are activated daily, and YouTube has more than 800 million monthly users, according to Google.
While Google makes Android available free to smartphone and tablet makers, the mobile operating system drives business its way by synching with the Internet firm's money-making online services, according to Page.
Google executives said they were "excited" about the prospects for low-priced Android tablets in a market where the high end is ruled by Apple's coveted iPads.
Page envisioned smartphones and tablets becoming the preferred gadgets for Internet lifestyles and said the company was smoothly integrating mobile services such as digital wallets and Offers local deals.
Industry tracker eMarketer forecast that Google's share of the $39.5 billion spent annually on online advertising in the United States would climb to 44.9 percent this year.