Google proposes stock split as profit soars
SAN FRANCISCO - Google on Thursday delivered a double-shot of good news to investors, announcing soaring profits and plans for a long-desired stock split that will make its shares easier to trade.
The Internet titan's stock price rose slightly to $652.80 a share in after-hours trading that followed release of the news.
Google reported a profit of $2.89 billion on revenue of $10.65 billion in the quarter ended March 31.
The performance trounced that seen in the same period last year when the California-based company had a net income of $1.8 billion on $8.57 billion in revenue.
"Google had another great quarter," said company co-founder and chief executive Larry Page.
"We also saw tremendous momentum from the big bets we've made in products like Android, Chrome and YouTube."
Google's founders said the board is supporting a plan to create a new class of non-voting stock that would be doled out in the form of dividends to existing shareholders.
The intent, according to Page, is to give investors a long-desired two-to-one stock split while preventing short-term interests from undermining long-term objectives at the company.
"We have protected Google from outside pressures and the temptation to sacrifice future opportunities to meet short-term demands," Page and co-founder Sergey Brin said in a letter to investors.
"We have a structure that prevents outside parties from taking over or unduly influencing our management decisions," they added.
Approval of the stock split by shareholders was considered a foregone conclusion since Google's two co-founders and chairman Eric Schmidt together have controlling interest in the company and support the move.
Google's stock price has soared since it went public in 2004, but the company shunned splitting shares in deference to a desire to appeal to people interested in investing in the firm for the long haul.
"While the decision was controversial at the time, we believe in hindsight that it was absolutely the right thing to do," Page said in an earnings conference call.
Creation of non-voting shares was motivated, in part, by control of Google being diluted by awards in the form of employee stock compensation and moves by Google's founders to sell off some of their stakes in the company.
"We need to ensure that Google remains a successful, growing business," Page said. "This proposal will only have an effect on governance over the very long term."
During the earnings call, Page and other executives played up the momentum of Android-powered mobile gadgets; video-sharing website YouTube, and the company's budding Google+ online social network.
"Google+ is truly at the heart of our efforts to create a simple, more intuitive experience for all of our users," Page said.
He portrayed Google+ as being a "social spine" giving backbone to the company's array of popular online services as well as being a destination for socializing on the Internet.
Page said that "well over" 170 million people have signed on to Google+ and that the number of people using the company's Chrome browsing software has topped 200 million.
About 850,000 smartphones or tablet computers powered by Android software are activated daily, and YouTube has more than 800 million monthly users, according to Google.
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