Google Announces Stock Split Amid 1Q Earnings

Page and Brin announce an unconventional 2-for-1 stock split that keep them in control of the search and online advertising powerhouse.

Google reported on Thursday that it had booked $10.65 billion in revenue during the first quarter of 2012 (1Q12), a 24 percent increase over the same period last year. Traffic acquisition costs took a $2.51 billion bite out of that figure.

Net income rose to $2.89 billion, a 60 percent increase over the $1.8 billion Google registered in 1Q12. On a non-GAAP basis, the figure rises to $3.33 billion.

Earnings per share (EPS) hit $8.75, based on 330 million undiluted shares and after taking traffic acquisition costs into account. Non-GAAP EPS came in at $10.08. Wall Street analysts were banking on $9.65 a share.

According to CEO Larry Page, Google's bets beyond search and advertising are starting to pay off. “We also saw tremendous momentum from the big bets we’ve made in products like Android, Chrome and YouTube," said Page. "We are still at the very early stages of what technology can do to improve people's lives and we have enormous opportunities ahead," he adds.

Google's sites continue to drive the majority of revenues, however, generating $7.31 billion for the company, or 69 percent of total revenues. Partner sites were responsible for $2.91 billion, or 27 percent of total revenues.

As of March 31st, the company sat atop a $49.3 billion war chest. That figure includes "cash, cash equivalents, and short-term marketable securities." Google was subject to an effective tax rate of 18 percent in 1Q12.

Stock Split, the Google Way

Co-founders Larry Page and Sergey Brin used the occasion announced that Google is instituting a new class of stock that essentially translates into a 2-for-1 stock split. Page and Brin spilled the details in their 2012 Founders' Letter to investors.

They wrote, "Today we announced plans to create a new class of non-voting capital stock, which will be listed on NASDAQ. These shares will be distributed via a stock dividend to all existing stockholders: the owner of each existing share will receive one new share of the non-voting stock, giving investors twice the number of shares they had before."

Acknowledging that the decision won't sit well stockholders that are fans of "more traditional governance models," the founders explain that the decision was made to maintain a founder-led approach to running the company. They add, "Having the flexibility to use stock without diluting our structure will help ensure we are set up for success for decades to come."

Simply put, Page and Brin remain firmly in control of Google's destiny.

Other highlights include:

  • Google booked revenues of $5.77 billion from outside of the U.S., representing 54 percent of total revenues 1Q12.
  • In 1Q12, paid clicks rose 7 percent over 4Q11 and increased 39 percent over the same period last year.
  • The average cost-per-click fell 6 percent over 4Q11 and dropped 12 percent in 1Q12 compared to the same year-ago period.

Pedro Hernandez is a contributing editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals. Follow him on Twitter @ecoINSITE.




Tags: Google, earnings


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