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Google Co-Founder Larry Page Gets Ready for His Close-Up

Wall Street shrugged off news that Google co-founder Larry Page will be assuming the web search giant’s CEO duties from Eric Schmidt, the veteran tech executive who was brought in a decade ago to manage the company. Google shares traded 2.5 percent lower on Friday during a down session for the Nasdaq, but that’s close […]
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The Jaguar C-Type of Duncan Hamilton and Tony Rolt passing under the Dunlop bridge at Le Mans in 1953. The car would go on to win the race.

Wall Street shrugged off news that Google co-founder Larry Page will be assuming the web search giant's CEO duties from Eric Schmidt, the veteran tech executive who was brought in a decade ago to manage the company. Google shares traded 2.5 percent lower on Friday during a down session for the Nasdaq, but that's close to the range of a typical Google trading day.

Several top Wall Street Google analysts said Friday that the firm will be just fine under the new leadership.

"We do not expect material changes to the strategy, and believe the company will be in capable hands under Page," UBS analysts Brian J. Pitz and Brian P. Fitzgerald -- aka Pitz and Fitz -- wrote to clients Friday.

Wedbush Securities analyst Lou Kerner suggested that the management shakeup "will likely be a red flag for investors, but continued strong financial performance should calm fears."

On Thursday, Google said that last quarter's net income rose 29 percent to $2.54 billion on revenue of $6.37 billion, which exceeded Wall Street expectations.

It's understandable that Page would want a crack at leading the company he co-founded. The 37-year-old Michigan native always seemed like he was destined to take the reins again after an initial stint running the company, as compared to his colleague Sergey Brin, the brilliant Russian immigrant who has seemed less focused on business and more on new products.

It's well-known that both Page and Brin look up to Apple CEO Steve Jobs, and the mercurial founder's triumphant return to Apple more than a decade ago, and subsequent success, may have influenced Page's decision to take a turn at the controls.

Wall Street's conventional wisdom holds that seasoned executives are brought in to guide a company and manage strong-willed founders once it has become successful, not the other way around. But Jobs showed that a founder could come back and be an effective CEO.

Is Page ready to be Google's chief executive? We'll find out. We do know that he read business textbooks for fun as a child. We also know that Google has some outstanding senior managers including Patrick Pichette, the ace CFO, and Jonathan Rosenberg, the VP of product development.

Was the Google China situation a factor, as media reporter Ken Auletta of the New Yorker suggests?

It's no secret that there has been tension between Page and Brin on the one hand, and Schmidt on the other, over Google business in China. The co-founders have a strong moral sense, hence the "Don't Be Evil" motto. These guys are not just businessmen. They're on a mission to make all the world's information available to people.

Schmidt, on the other hand, in his role as CEO, had a fiduciary responsibility to the shareholders to push hard to crack China, which is fast becoming the most important market in the world. It would have been negligent of him not to. But I'm sure that battle took a toll on him, especially considering the fact that he basically lost the argument, with Google being relegated to serving results from Hong Kong.

So what about the argument advanced by Helft and Miller in The New York Times that Page wants to re-introduce a startup vibe in light of growing threats from Facebook, Twitter and discount shopping website Groupon?

"While this news came as surprise, we believe the CEO change can help the company refocus its efforts on innovations, as its growth opportunities become less driven by strategic acquisitions due to its current size," Gleacher and Co. analyst Yun Kim told clients Friday.

On the other hand, the idea of Google-as-2011-startup is a little quixotic. A 13-year-old, $200 billion company with 25,000 employees cannot operate as nimbly as a young startup, no matter how many pep talks Page gives.

Global Equities Research analyst Trip Chowdry suggested that Google's unsuccessful $6 billion bid to buy Groupon may have been another source of tension.

Schmidt was "interested in paying $6 billion for Groupon, while founders [Page and Brin] felt Groupon to be total junk," Chowdry wrote in a note to clients Friday. After losing that deal, Google launched its own Groupon-like service.

Luckily for Page, as well as Google's shareholders, this company's core business is rock-solid. The Mountain View money machine is printing profit and sitting on $35 billion in cash. It just executed last year's biggest real estate deal of the year without a sweat, and the down payment was little more than a rounding error for the company.

Search, display ads and the Android mobile operating system are all booming.

"The key themes of an improved macro environment coupled with explosive mobile-device growth accelerating internet usage faster than anyone expected is playing out," Macquarie analyst Ben Schachter observed Friday.

Page is young, motivated and, according to Schmidt, ready for prime time.

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