Google, the online search engine leader, has reported a 61 per cent increase in its net income for the first three months of the year and announced plans to issue a new class of stock to shareholders.
The new shares won't have any voting power and will help Google's senior leaders keep control years from now.
Under the plan, expected to win approval in June, all current stockholders would get one share of the new Class C stock for each share they now own. This effectively splits Google's stock price in half.
Google said that it earned $2.89 billion, or $8.75 per share, in the first quarter. That's up from $1.8 billion, or $5.51 per share, a year earlier. Excluding one-time items, Google earned $10.08 per share, higher than the $9.66 that analysts polled by FactSet had expected.
Total revenue was $10.65 billion, up 24 per cent from $8.58 billion.
After subtracting ad commissions, Google's revenue totaled $8.14 billion in the latest quarter. Analysts were expecting revenue of $8.09 billion on this basis.
Google's revenue was helped by a 39 per cent increase in "paid clicks," but the prices of its search-driven text ads continued to decline. The so-called "cost-per-click" for these ads declined 12 per cent from the same time a year earlier.
Employees given Google stock in the future would get the non-voting stock, allowing voting power to remain with existing shareholders. The same would hold true for companies that Google buys using its stock.
Stock splits reduce prices for each share, allowing smaller investors to participate. Although Google said investors had been clamoring for one, the decision announced on Thursday seemed driven more by a desire to retain control.
Without change, senior leaders would eventually lose their voting power. CEO Larry Page and fellow co-founder Sergey Brin said that would undermine "our aspirations for Google over the very long term."
Since it went public in 2004, Google's founders have emphasised a need to insulate management from short-term pressures. That's a view now commonly held by the newest generation of freshly public - or soon-to-be public - tech companies such as Zynga Inc. and Facebook Inc.
Even so, issuing shares with no voting power is unusual. But that's been Google's way since its beginning, even as it turned into a multi-national corporation. The company held a "Dutch auction" for its initial public offering of stock, allocating new shares to the highest bidders, including small investors. Traditional IPOs favor large investment banks.
Google's founders argue that Google will be more successful if the company concentrates on its long-term vision. This can mean short-term stumbles in meeting Wall Street's targets for earnings and revenue, as well as investments that may not bear fruition for years.
"These kinds of investments are not for the faint-hearted," the founders said in a letter posted online.
Google's stock climbed $3.09, or about 0.5 per cent, to $654.10 in after-hours trading. Before the announcement, the stock had gained $15.05, or 2.4 per cent, to close at $651.01.