April 12, 2012 at 16:11 PM EDT
GOOG Rising: Q1 Rev Misses, EPS Beats; Sets New Class of Stock
Google (GOOG) this afternoon reported Q1 revenue below consensus but beat on the bottom line. It also said it would split its stock two-for-one via a new class of shares to be distributed to shareholders. Revenue in the three months ended in March rose 24% to $8.14 billion, after subtracting Google’s cost to acquire traffic, [...]

Google (GOOG) this afternoon reported Q1 revenue below consensus but beat on the bottom line. It also said it would split its stock two-for-one via a new class of shares to be distributed to shareholders.

Revenue in the three months ended in March rose 24% to $8.14 billion, after subtracting Google’s cost to acquire traffic, or “TAC,”  yielding EPS of $10.08.

Analysts had been modeling $8.15 billion and $9.66 per share, according to FactSet.

Google’s owned and operated site revenue rose 24%, while partner sites brought in a 20% rise in revenue.

Paid click growth was 39% compared to the year-earlier period, and 7% compared to Q4′s level.

The company’s closely watched “cost per click” metric, the amount it gets paid for search ads, on average, fell 12%, year over year, and 6% from Q4′s level, it said.

The company generated $3.09 billion in free cash flow in the quarter, after subtracting for $607 million in capital expenditures. That brought total cash, equivalents, and marketable securities to $49.3 billion at the end of the quarter.

Google’s headcount rose by about 2% from Q4 to total 33,077.

In a letter to shareholders, founders Sergey Brin and Larry Page, CEO, said they have accomplished what is “effectively a stock split,” by creating a “new class of non-voting capital stock,” to be listed on Nasdaq.

After a long defense of many of the company’s founding principles, as the two see it, including a stock structure that “prevents outside parties from taking over or unduly influencing our management decisions,” Brin and Page lay out the perceived appeal of the new shares:

These shares will be distributed via a stock dividend to all existing stockholders: the owner of each existing share will receive one new share of the non-voting stock, giving investors twice the number of shares they had before. It’s effectively a two-for-one stock split—something many of our investors have long asked us for. These non-voting shares will be available for corporate uses, like equity-based employee compensation, that might otherwise dilute our governance structure.

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. 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.

Google shares are up $8, or 1%, at $659.01 in late trading.

Google’s conference call with analysts is ongoing, having gotten underway at 4:30 pm, Eastern time. You can catch the webcast of it here.

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