Google Inc. (NASDAQ: GOOG) may find itself having to explain the situation better after reporting what appears to be higher than expected earnings.  The company is proposing a new class of stock that would effectively implement a 2-for-1 stock split and that may confuse investors after it says that it would preserve its long-term governance structure.  This is the first effort at a dividend if you just trust the company’s wording, although there is no cash dividend in the news.

The cost-per-click is continuing to head lower, but the traffic was up.  Google noted a 12% drop from a year ago and down 6% from the prior sequential quarter. Aggregate paid clicks rose 39% over the first quarter of 2011 and increased approximately 7% over the fourth quarter of 2011.

Adjusted earnings came to $10.08 EPS and its quarterly revenues rose 24% from a year ago to $10.65 billion, but the Traffic Acquisition Costs were $2.15 billion or 25% of advertising revenues.  That puts an adjusted revenue figure at $8.5 billion on an adjusted apples to apples basis.  Thomson Reuters had estimates at $9.65 EPS and $8.15 billion in sales.Non-GAAP operating income in the first quarter of 2012 was $3.94 billion, or 37% of revenues.

Google ended the quarter with some $49.3 billion in cash and marketable securities.

Google-owned sites had revenues of $7.31 billion, or 69% of total revenues, a gain of 24% from the first quarter 2011 revenues of $5.88 billion.  Google’s partner sites generated revenues of $2.91 billion, or 27% of total revenues, and that is up 20% from first quarter 2011.  Revenues from outside of the United States came to $5.77 billion, representing 54% of total revenues in the first quarter of 2012, compared to 53% in the fourth quarter of 2011 and 53% in the first quarter of 2011.  Google also employed 33,077 employees globally, up from 32.467 at the end of 2011.

As far as the new share structure, here is the quote from Larry Page: “Today we announced plans to create a new class of non-voting capital stock, which will be listed on NASDAQ. 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.”

Google closed up 2.3% at $651.01 today and shares are trading around $655 in the after-hours session.

JON C. OGG

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