Today’s the day that co-founder and inventor of the PageRank algorithm takes back the reigns of Google, replacing Eric Schmidt who reigned over a successful decade of expansion.
Today’s the day.
Although, Eric Schmidt’s role as “Adult Supervisor” has been joked about, the stability he brought to the company did hold some intrinsic value. Not only is he leaving as the most popular Tech CEO with his employees, he was a grounding force for Google’s more outlandish founders.
In comments to NPR, Inside the Plex author Stephen Levy says that things at Google are going to get wilder.
Colin W. Gillis at BCG Partners thinks this may hurt Google’s share price. His thinking is that Page will be less focused on the bottom line, and investments will take priority over profits. His five concerns with a Page-led Google are:
- TRUST. Google is increasingly perceived as a company that consumers should be concerned about trusting with the large amount of data that it collects. Partners are also wary of Google in our opinion.
- FOCUS. We are interested to see if new CEO Larry Page can tighten the focus of the companywhile also boosting its innovation in its core businesses, a difficult balance.
- EXPENSES. Our EPS estimate is below consensus increase in its expense base due to the across the board 10% lift in salaries and the associated ripple effect such as taxes, benefits, 401Kcontributions, and increased costs associated with hiring new employees.
- REVENUE. The company is moving back into the seasonally more difficult part first half of the year – and while click pricing remains solid, the impact of cleaning up its search results frequently comes at the cost of lost revenue from the ad-filled sites that have been demoted.Finally the company is also facing more difficult growth comparisons as results are now past the one year anniversary of the economic recovery from the 2008 recession.
- BRANDS. Google still is not an effective partner to many large brands in our opinion, and we are interested to see if this changes for the better or worse under the new CEO.
Therefore, Gillis/BCG has a HOLD rating on Google.
For an idea of what Larry Page thinks about, have a listen (the video and audio aren’t synched very well) of Larry Page’s hour long talk at the American Association for the Advancement of Science in 2007.
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