Google’s 1st Quarter Earnings Lead To Split Stock
Once again, Google is leader in its market with quarterly earnings that show the IT business continues to thrive. But if Google’s 1st quarter earnings show that the company has gone a long way since last year’s same period report, the decision it’s about to make might point to potential internal management clashes. Surprising as it might be, Google’s 1st quarter earnings have lead to a decision to split stock so co-founders Page and Brin would remain in control.
On the overall, Google’s first quarter earnings have been so good they have exceed Wall Street’s profit expectations. Adjusted earnings were $10.98 a share, impressively higher than Wall Street’s $9.65 a share and 2011’s $8.08 a share. Net income was reported at $2.89 billion, almost double than what it was one year ago and revenue was up 24 percent compared to 2011, reaching $10.65 billion this year.
After the news hit the market, Google shares rose two dollars until the afterhours trading, from $651.01 to $653. But the report on Google’s earnings didn’t bring just record breaking data. The company’s revenue from search advertising dropped 12 percent and experts fear the decline is going to continue throughout the upcoming quarters.
Google’s earnings for the 1st quarter were a good opportunity to present a surprising decision: split the stock. The decision has been approved by members of the company’s board in unanimity as it makes sure that co-founders Larry Page and Sergey Brin will remain in control for a long time to come.
Chief Executive Officer Larry Page and Sergey Brin released the following statement: “We have put our hearts into Google and hope to do so for many more years to come. So we want to ensure that our corporate structure can sustain these efforts and our desire to improve the world”.
Bloomberg points out that the stock split decision “would create a new class of nonvoting shares that will be distributed to existing shareholders in what is effectively a 2-for-1 stock split”. So this means that for each share they hold, investors will receive one other share from the new stock.