Google Exceeds Q4 Expectations as Schmidt Steps Down

Google Jan. 20 reported $8.44 billion in revenues, earnings per share of $7.81, and a profit of $2.54 billion for the fourth quarter. Oh, and Google CEO Eric Schmidt is passing the torch to co-founder Larry Page.

Google on Jan. 20 married a management shakeup with a fine fourth-quarter earnings report, including $8.44 billion in revenues, earnings per share of $7.81, and net profit of $2.54 billion.

Google's revenue increased 26 percent from the fourth quarter of 2009, while net profit rose 29 percent from $1.97 billion.

The search engine recorded $2.07 billion in TAC (traffic-acquisition costs), or revenue shared with Google's partners. Google's paid clicks were up 11 percent from the prior quarter and 18 percent from the year-ago quarter.

"Q4 marked a terrific end to a stellar year," Google CEO Eric Schmidt said in a statement. "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."

Google's results may offset the uncertainty surrounding the announcement of Schmidt's exit on April 4 as CEO.

Google Co-founder Larry Page is taking over as CEO and will oversee day-to-day operations, including product and technology development. Google Co-founder Sergey Brin is expected to work on special projects and products at Google.

Page and Brin, who Schmidt joked on Twitter no longer required "adult supervision," were effusive in praise for their mentor on the company's Q4 earnings call.

Google's stock, which closed down almost $5, rose $14 in after-hours trading, a signal that investors improved of the move.

Schmidt joined Google in 2001, with Page assuming the mantle of president of products and Brin nabbing the president of technology role.

Schmidt helped the company usher in dozens of Web services, including Gmail, Google News and, perhaps most important, the Android operating system the company cultivated through a 2005 acquisition and launched to open source in 2007.

Google had a properly busy Q4, launching its Chrome Operating System test flight program by dispensing thousands of Cr-48 notebooks to media, analysts and company partners.

Google topped off the quarter, which ended Dec. 31, with an uncharacteristically busy December. On Dec. 6, the company launched both the Samsung Nexus S smartphone and its long-awaited Google eBooks initiative. None of these efforts were likely particularly material for the quarter.

Search Engine Land's Danny Sullivan, who has covered Google since its quiet inception, said Google is probably overdue for a major management reorganization after having the same structure for the last decade.

"In that time, Google has transformed from a scrappy little underdog search engine into a massive advertising and technological powerhouse. The start-up culture seemingly has been largely swallowed by the inevitable bureaucracy that comes with getting bigger. Meanwhile, it has faced challenges in convincing new and key employees that it remains the place to be, versus rivals like Facebook."

All of which is to say, the threats from Facebook and Apple in mobile computing may have facilitated Schmidt's push to the top.