Google Inc. announced a stock split designed to preserve the control of co-founders Larry Page and Sergey Brin over the No. 1 Internet search engine, as it posted revenue in line with estimates.
Investors welcomed the first quarter revenue of $8.15-billion (U.S.) after the company’s rare miss in the previous quarter.
Shares of Google, which finished Thursday’s regular session at $651.01, rose 6 per cent 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 Mr. Page completes the first 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 per 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, Mr. 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,” Mr. 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.”
Mr. 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, Mr. Page added in his letter without elaborating.
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