After Years of Saying No, Google Splits Stocks

Google reported earnings from the first quarter of 2012 today, and it looks like the Mountain View company is running as strong as ever - or at least stronger than at the end of last year. Google is still a one-trick pony when it comes to earning money, with 96% percent of its revenue coming from company-owned websites or network partner sites. Revenues for the first three months of the year came in at $10.65 billion, an increase of 24% from the first quarter of 2011. The big news, however, was that despite its years-long refusal to split its stock, Google announced today it was doing just that.

Google's Founders Remain in Control

The biggest news to come out of the call was the announcement that the company was creating "a new class of non-voting capital stock." In layperson's terms, that means that Google shareholders are getting a 2-for-1 stock split but they still don't have a lot of power.

For a bit of reference, Google was one of the first companies to file for an initial public offering with two separate types of stock, Class A and Class B. Class A stock remains in the hands of CEO Larry Page and cofounder Sergey Brin, along with high-ranking Google executives, while Class B stock is available to the masses. As far back as 2006, as the stock price crept higher and higher, would-be investors were begging the company to split its stock.

But as then-CEO Eric Schmidt said in an interview in 2008, "We're not going to split it."

Fast forward to 2012. "We recognize that some people, particularly those who opposed this structure at the start, won't support this change - and we understand that other companies have been very successful with more traditional governance models," Page and Brin wrote in a letter to investors. "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. Having the flexibility to use stock without diluting our structure will help ensure we are set up for success for decades to come."

In Other News: Q1 Was Better Than Q4

Remember when everyone freaked out over Google's final earnings report for 2001? Today was much calmer. Google reported revenue of $10.65 billion for this quarter, up 24% from Q1 2011, and net income up 60% to $2.89 billion from the same time period. That was pretty much in line with what analysts were expecting. The amount that advertisers pay when someone clicks on a Google ad - called cost-per-click - was down, just like last quarter, but the number of people clicking was up 39% from last year.

Google+ Rising

One of the more fascinating aspects of Larry Page's quarterly earnings calls are the updates on how Google+ is growing. Page called Google+ the "social spine" of the company's enterprise and said that the service has 170 million users. That number is up significantly from the Google Q4 earnings call, when Page said that the site had 90 million users globally.

Google still has not released how many daily or monthly active users its social platform has, an important metric to see how many people actually use the service. The number of Google+ users doubled between Q3 and Q4 2011 and nearly doubled again in the first quarter of the new year.

The evolution of Google+ into the company's portfolio is an interesting study. New Google users are now forced to sign up with Google+, and its "Search Plus Your World" feature integrates sharing into search results and makes users' Google profile the center of how results are delivered. In that way, Google+ really has become the spine of everything that Google is doing, injecting a social structure into search and acting as the hub in which all other Google services revolve including Gmail and its Chrome browser.

Photo by quinn.anya.