January 21, 2011, 11:13 AM — Shares of online search giant Google (NASDAQ: GOOG) rose in early trading Friday as Wall Street continued to digest the company's blowout fourth-quarter results and totally unexpected top-management change.
By mid-morning, shares were up 7.62 to 634.39, or 1.2 percent above Thursday's market close of 626.77.
(Also see: Google co-founder Larry Page to take over as CEO)
In conjunction with its fourth-quarter earnings release, Google announced after Thursday's market close that co-founder Larry Page will take over as chief executive from Eric Schmidt, who will remain as executive chairman of the company he joined in 2001. The changes will begin on April 4.
Google reported Q4 profit of $2.54 billion, or $8.75 a share, versus a profit of $1.97 billion, or $6.79 a share, in the fourth quarter of 2009.
Gross revenue in Q4 was $8.44 billion, up 26 percent from the year-ago gross revenue of $6.67 billion.
The search giant's top-line numbers easily beat consensus estimates of $8.06 per share in net income and revenue of $6.06 billion.
In addition to its ongoing strength in search advertising, Google attributed its impressive performance to growth in display advertising, mobile advertising and advertising on YouTube. (Sounds like advertising is working out pretty well for the company!)
As impressive as Google's financial performance was, the results were totally overshadowed by the stunning announcement that Schmidt, 55, who joined the company as chairman of the board in March 2001 and became CEO five months later, will turn over the reins to Page, 37, who started Google with co-founder Sergey Brin at Stanford University in 1998.
Schmidt said the change has been in the works for months and attributed it to a desire to simplify management structure and speed up decision making.
Theories abound as to the underlying reasons behind the move, with some insiders citing tension between Schmidt and the two co-founders over issues such as censorship in China. And while some observers have questioned whether Page is ready to run a huge Internet company trying to retain its edge in a rapidly changing online landscape -- an impression perhaps inadvertently reinforced by Schmidt's tweet Thursday that "day-to-day adult supervision (is) no longer needed!" (um, the incoming CEO is almost 40) -- the market's initial reaction appears to be positive.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.