Google’s Shakeup Casts a Shadow

Heading into earnings season, it was a concern for investors as to how easily the big guns in the tech sector would surpass Wall Street estimates. Apple (NASDAQ: AAPL ) delivered the goods on Tuesday, and late Thursday, so did Google (NASDAQ: GOOG ). The search giant said after the closing bell that it posted fourth-quarter earnings of $8.75 a share on revenue of $6.37 billion — both figures that blew past analysts’ expectations by a wide margin. But Google also delivered something else — news that it would shake up its management structure, moving co-founder Larry Page into the CEO role, while current Chief Executive Eric Schmidt is to become executive chairman, “focusing externally on deals, partnerships, customers and broader business relationships, government outreach” and something called “technology thought leadership.” Investors are now left in a bit of a quandary: here’s the quarter they were looking for, and then some, but future quarters are to likely have less day-to-day input from one of the guys responsible for the success . Google’s after-hours share price seemed to reflect that tug-of-war — the stock was up just 2% in after-hours trading to $639 after falling slightly in the regular session. Similar to Apple’s strong report on Tuesday, however, it may be another case of a company’s incredible success being immune to anybody’s meddling for the foreseeable near-term future. After all, here’s a company — as large as Google is — still able to post nearly a 30% rise in revenue, while its all-important paid clicks, the number of times people click on search results sponsored by advertisers, grew 18% from last year, beating expectations of 15%. What’s more, international revenue alone jumped 52% from a year earlier. Investors are now left with a sort of interesting dual competition between two of the top 5 American companies for the first half of 2011, at least — which high-performing company, Google or Apple, with its CEO, Steve Jobs, on the bench for six months, does a better job of still delivering stellar financial results? As far as that concerns the 2011 fate of the Nasdaq, which has now dropped 2.2% in two days, both companies will need to keep the growth engine revving.
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