Google CEO to Step Down

http://www.nytimes.com/2011/01/21/technology/21chief.html?_r=1&hp

The New York Times

January 20, 2011
Shake-Up at Google as Co-Founder Takes Over
By MIGUEL HELFT

SAN FRANCISCO — Google said Thursday that Larry Page, its co-founder and president of products, would take over as chief executive, succeeding Eric E. Schmidt, the company’s longtime chief.

Mr. Schmidt will remain executive chairman and serve as adviser to Mr. Page and Sergey Brin, the other company co-founder and its president of technology.

The shake-up, which will take effect April 4, is the biggest change in management at the company since Mr. Schmidt joined as chief executive in 2001.

“Larry, Sergey and I have been talking for a long time about how best to simplify our management structure and speed up decision making — and over the holidays we decided now was the right moment to make some changes to the way we are structured,” Mr. Schmidt wrote in a blog post.

Mr. Schmidt said Mr. Page would “merge Google’s technology and business vision,” while he would focus on external issues, like “deals, partnerships, customers and broader business relationships.”

In the blog post, Mr. Schmidt said the three executives would continue to collaborate on major decisions, but that the changes would help clarify the individual roles so “there’s clear responsibility and accountability at the top of the company.”

On his Twitter account, Mr. Schmidt, who was widely described as “adult supervision” for the two young founders when he was named chief executive, wrote: “Day-to-day adult supervision is no longer needed.”

The decision came as a shock to many in Silicon Valley. “Larry stepping up to be C.E.O. is really surprising,” said Danny Sullivan, the editor of SearchEngineLand, an industry blog, who has followed Google since its founding. “Those guys hadn’t really shown that they wanted to be C.E.O.,” he said about Mr. Page and Mr. Brin.

The shake-up comes as Google, while continuing to dominate the world of Internet search and advertising, has struggled in some areas, especially social networking, where the rise of Facebook has become the most real threat to Google in years.

“I can’t tell yet whether it would be a case of them being frustrated with Eric, which would surprise me, or Eric being tired of being the front man for the company,” Mr. Sullivan said.

Ken Auletta, the author of a book about the company called “Googled: The End of the World As We Know It,” said he suspected that Mr. Schmidt may simply have been ready for a change after 10 years at the helm.

“I don’t think he was pushed aside, but he may have been nudged,” he said, adding that between the two founders, Mr. Page always appeared more interested in eventually becoming chief executive. “Clearly Sergey has been paying less attention to management than Larry,” he said.

In the unusual management “troika,” Mr. Auletta said, Mr. Page’s voice always carried the most weight.

The unexpected news came as Google announced its fourth-quarter earnings, which handily beat the expectations of Wall Street analysts.

Google reported net income in the quarter ended Dec. 31 of $2.54 billion, or $7.81 a share, up from $1.97 billion, or $6.13 a share, in the quarter a year earlier. Excluding the cost of stock options and the related tax benefits, Google’s fourth-quarter profit was $8.75 a share, compared with $6.79 a share in the quarter a year ago.

The holiday season was the best for online shopping since 2006, with sales up 12 percent over last year, according to comScore; Google benefited as online shoppers increasingly began their shopping sprees at the search engine.

“Whenever e-commerce improves, we see more advertisers competing for the same keywords, and that means more revenue for Google,” Sandeep Aggarwal, an Internet analyst at Caris & Company, said.

To make it easier for shoppers to find what they were looking for, Google introduced tools like Boutiques.com and search results that show which offline stores have an item in stock. It also began offering retailers product ads with images.

Google’s revenue climbed 17 percent to $8.44 billion in the quarter, up from $6.67 billion a year earlier. Net revenue, which excludes commissions paid to advertising partners, was $6.37 billion, up from $4.95 billion.

“Our strong performance has been driven by a rapidly growing digital economy, continuous product innovation that benefits both users and advertisers, and by the extraordinary momentum of our newer businesses, such as display and mobile,” Mr. Schmidt said in a statement.

Claire Cain Miller contributed reporting.