Google's Q1 profit soars 61%, announces stock split
Google has posted 61% jump in net income for the January-March quarter and announced a stock split designed to give founders Larry Page and Sergey Brin larger control and make takeover attempts difficult.business Updated: Apr 13, 2012 16:06 IST
Google has posted 61% jump in net income for the January-March quarter and announced a stock split designed to give founders Larry Page and Sergey Brin larger control and make takeover attempts difficult.
Google's net income in the first quarter of 2012 increased to USD 2.89 billion, compared to USD 1.8 billion in the same quarter last year, the company said in a statement.
It reported 24% surge in revenues from the year-ago period to USD 10.65 billion for the quarter ended March 31, 2012.
Google said it would create a new class of non-voting capital stock that would be separately listed on the Nasdaq Stock Market.
Under the stock split, the existing investors would receive one share of the non-voting stock for each share they now own.
"It's effectively a two-for-one stock split—something many of our investors have long asked us for," Google said.
These non-voting shares will be available for corporate uses, like equity-based employee compensation, that might otherwise dilute Google's governance structure.
The move is designed in a manner which would give Page and Brin a firm grip on the nearly 60% of the voting power.
"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...," the two co-founder said.
"In the transition to public ownership, we have set up a corporate structure that will make it harder for outside parties to take over or influence Google. This structure will also make it easier for our management team to follow the long term, innovative approach emphasised earlier...
"New investors will fully share in Google’s long term economic future but will have little ability to influence its strategic decisions through their voting rights," they added.
Page said some investors —- particularly those who have opposed its dual-class voting structure —- at the start would not support the change. But he said Google's board decided the structure is in the best interest of the company and shareholders.
Google said the average amount paid by advertisers every time a user clicked on their ad declined by 12% compared with the year-ago period.
However, the growth of paid click, a measure of how frequently users click on its ads, rose by 39% in the first quarter compared with a year earlier.