UPDATE 4-Google stock split helps Page, Brin maintain grip
* Page asks for investors trust in long term vision
* Results solid but some worry about 2nd straight slide in search ad rates
* Q1 adjusted EPS $10.08 vs Street's $9.65
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 world's No. 1 Web search engine, asking investors to trust their long-term vision.
The surprise decision, which its board unanimously approved, came as the company exceeded Wall Street's profit expectations but revealed a worrying 12 percent drop in search advertising rates - the second consecutive quarterly decline.
Shares of Google, which finished Thursday's regular session at $651.01, rose to $653 in after-hours trading.
Google's corporate structure, which gives the founders majority voting control of the company, has been emulated by later generations of Web sensations such as Zynga Inc and Facebook. But the stock split goes even further by ensuring that the founders' voting heft will not be diluted over the long term.
The news came just as Page completed a year in the chief executive's seat for the second time, during which he spearheaded the planned $12.5 billion acquisition of Motorola Mobility and launched a social network to take on Facebook .
With competition heating up in the Internet market and gadgets such as smartphones and tablet personal computers reshaping the technology landscape, many investors are trying to figure out how Google's business will be affected.
Google delivered a healthy first-quarter profit, with net income growing to $2.89 billion from $1.80 billion in the year-ago period.
Earnings of $10.08 per share, excluding certain items, surpassed the $9.65 that analysts had predicted - a source of relief to investors after a rare earnings shortfall in the previous quarter.
"The questions are not really the numbers around the quarter. The questions are much more higher-level strategically," said Macquarie Research analyst Ben Schachter.
He cited concerns around the pending acquisition of Motorola which will put Google in the hardware business - an area it has no experience in, with much lower profit margins than its online ad business.
Google executives did not address the Motorola deal, which is expected to close in the first half of this year, during the conference call with analysts on Thursday.
But Google CEO Page defended the company's philosophy of focusing on long-term goals that can take years to pay off, citing successful past "big bets" such as the purchase of video site YouTube for $1.65 billion and the development of its Android mobile software, now the world's No.1 smartphone operating system.
The best way to keep finding the big opportunities, Page said, is to maintain the special corporate structure that gives him and co-founder Sergey Brin 56.7 percent of the voting control.
"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.
Google said its board of directors has approved a new type of special non-voting "Class C" shares which will ensure that Page and Brin's control doesn't get diluted as the company issues new shares for employee compensations and acquisitions.
The dividend, in effect, works like a 2-for-1 stock split: Investors will get one share of the new "Class C" stock for each existing Google share. The price of Google's current "Class A" shares will be halved when the new Class C shares are issued and listed on Nasdaq under a separate ticker.
"I can't think of another example where a company created an additional class of shares and issued them to existing shareholders," said Bob McCormick, chief policy officer at Glass Lewis, an independent proxy advisor. But he said the move simply perpetuated a system that shareholders had agreed to when Google went public eight years ago.
Google executives said the company continued to gain ground with large advertisers during the first quarter, particularly for the display ads on its YouTube site and for mobile ads.