CORRECTED-UPDATE 2-Google plans stock split; results spur relief

Thu Apr 12, 2012 5:47pm EDT

By Alexei Oreskovic

SAN FRANCISCO, April 12 (Reuters) - Google Inc announced a stock split designed to preserve the control of co-founders Larry Page and Sergey Brin over the No. 1 Web search engine, as it posted revenue in line with estimates.

Investors welcomed the first quarter revenue of $8.14 billion after the company's rare miss in the previous quarter.

Shares of Google, which finished Thursday's regular session at $651.01, rose 0.6 percent to $655 in after-hours trading.

Google said its board of directors has approved a dividend of stock to existing shareholders that it calls a 2-for-1 stock split, preserving its corporate structure.

"This stock split dividend, a dividend of a non-voting shares, is really just so the company can maintain control," BGC analyst Colin Gillis said.

The announcement comes just as Page completes a year of his return as chief executive.

Net revenue, excluding fees paid to partner websites, totaled $8.14 billion in the three months ended March 31, compared with $6.54 billion in the year-ago period and analysts' average estimate of $8.15 billion according to Thomson Reuters I/B/E/S.

Google reported earnings of $10.08 per share, excluding certain items, surpassing the $9.65 that analysts had predicted - another source of relief after the previous quarter's earnings miss.

Net income was $2.89 billion, or $8.75 per share, compared with $1.80 billion, or $5.51 a share, in the year-ago period when Google took a $500 million charge to settle a government probe into its advertising practices.

Since taking the reins one year ago, Page has cut back on extraneous projects, launched a social networking service to challenge Facebook, and signed a $12.5 billion deal to acquire smartphone maker Motorola Mobility Inc.

"When we went public, we created a dual-class voting structure. Our goal was to maintain the freedom to focus on the long term by ensuring that the management team, in particular Eric, Sergey and I, retained control over Google's destiny," Page said in a letter explaining the moves.

"We are creating a corporate structure that is designed for stability over long time horizons. By investing in Google, you are placing an unusual long term bet on the team, especially Sergey and me, and on our innovative approach."

Page said he had secured the unanimous approval of Google's board for the share-based moves, but stressed "there's no particular urgency to make these changes now."

The new class of non-voting stock to be distributed to shareholders will eventually be listed on the Nasdaq, Page added in his letter without elaborating.

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Comments (1)
It sounds like a scam. Investors actually DID NOT get anything from the company. The claimed cash in-flow earning may be not existent, therefore impossible to give out REAL money. Rather, the company choose to print “papers” with the trick of “stock share dividend”. Besides, the dividend they will give out HAVE NO REAL IMPACT of the company. This kind of share is like toy checks, which is totally dissociated from real ownership of the company. STOCK SHARE by definition represent investors’ power/ownership of a certain company. A STOCK SHARE without actual power share of a certain company VIRTUALLY HAS ZERO MARKET VALUE. In goog’s example (if it is true), this kind of illusion dividend stock share is totally an artificial dreaming toy bank check. (It is like a cheating way to pay out artificial money and to cut down the ownership power percentage of existent investors). You own a stock paper to sell to next fool to earn real money, and the company claim they give you money.

Apr 12, 2012 8:15pm EDT  --  Report as abuse
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