Google Earns $10.65 billion in Q1 2012; Announces Stock-Split

More than half of revenue growth from outside the U.S.; Company execs remain 'bullish' on ad revenue from mobile, tablets, Google Play and apps.

It's another good quarter for Google.

The Mountain View-based Internet company reported revenues of $10.65 billion for the first quarter in 2012, a 24 percent increase compared to 2011. Of this, $5.77 billion, or 54 percent came from overseas. The company's earnings per share of $10.08 beat Wall Street's expectation of $9.64 on average, according to data compiled by Bloomberg.

With $49.3 billion cash on-hand, questions have arisen whether the company would issue a dividend. Investors got an answer.

For the first time ever, the company will issue a stock dividend through the creation of non-voting capital stock to be listed on NASDAQ, Co-Founders Larry Page, CEO and Sergey Brin announced in a letter. This non-traditional method, they added, might upset some shareholders.

"But after careful consideration with our board of directors, we have decided that maintaining this founder-led approach is in the best interests of Google, our shareholders and our users," Page said. "Having the flexibility to use stock without diluting our structure will help ensure we are set up for success for decades to come."

David Drummond, senior vice president of corporate development and chief legal office, explained the two-for-one split would give shareholders of Class A a Class C shares. Class C shares are non-voting but can be traded and used for corporate uses, like equity-based employee compensation.

All that cash is there for the long-term, Page added. He made it clear that "we don’t have an unusually big acquisition planned, in case you were wondering."

The company's operating income was $3.39 billion for the quarter compared to $2.3 billion in 2011.

Google's cost-per-clicks decreased by 12 percent over the quarter and 7 percent in the fourth quarter of 2011, but CFO Patrick Pichette reiterated that "our business is healthy" adding that these measurements "are very complicated." The paid clicks increased approximately 39 percent in the first quarter.

Nikesh Arora, chief business officer, also explained the strength of their ad revenue across various platforms like Search and YouTube—which now has 800 million month users—and especially now with mobile, where they remain "bullish" on the cost-per-clicks due to products like Google Wallet.

On the earnings call, Page reiterated the importance of Google+ to the company. More than 170 million people now use the social network.

"The social spine is important to Google," said Larry Page.

The number of Googlers grew by 610 for the quarter to bring the company to a worldwide total of 33,077.


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