Yesterday's Google (GOOG) earnings call, in which the company missed Wall Street expectations, left me thinking how apt it would have been had co-founder Larry Page started as CEO on April Fool's Day (instead of April 4). Google has as many problems as opportunities right now, and needs a CEO who can exhibit the experience, temperament, and sensitivity to stakeholders necessary to set things right.
Too bad Page is doing just the opposite.
Page deigned to remain on the call for all of 2 to 3 minutes. Granted, the last quarter was actually under the steerage of former CEO Eric Schmidt. But that doesn't matter for the following reasons:
- Google always advertised itself as run by a triumvirate: Schmidt, Page, and co-founder Sergey Brin. The buck -- or at least 33.3 cents worth -- stopped exactly where it should have.
- Page has been president of products for 11 years. In the most recent quarter, Google's percentage of non-advertising revenue actually dropped to three percent from four percent. Google effectively has no business beyond selling advertising; after 15 years, it's really a one-product company that spends 14.3 percent of revenue on R&D.
- It was clear that Page's performance could upstage the actual numbers even before the call.
- The immense 35 percent year-over-year increase in operating expenses -- combined with a drop inoperating income as a percentage of revenue -- demanded an explanation.
Henry Blodget is right that Google needs to focus on long-term success and innovation, but Page's problem isn't that he's failed to bury his nose in Wall Street's backside. A chief executive who can't muster enough interest to address analysts and investors when his company's performance is in question simply may not have the interpersonal skills to manage a large enterprise, or even a small one. Is there any doubt that Page's drive-by commentary was a major reason Google shares fell 4.6 percent after hours?
To top it, the financials slide show used RealPlayer and Windows Media Player, rather than YouTube, which, as Liz Gannes points out, the company used in recent quarters. It's hard to argue for your own superiority when you rely on competitors products.
Page's running of Google has all the earmarks of a disaster in the making. A hasty judgment? Perhaps, but you can tell a lot in a few minutes by how people handle themselves. If Page hasn't changed in the last 11 years, then a new title isn't going to make much difference. And that will severely limit what he can accomplish. No matter how much Google would like to automate the world, companies are always in the people business.
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