Analysts Shrug Off Google’s Shakeup

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The unexpected news that Google (NSDQ: GOOG) CEO Eric Schmidt will step down does not seem to have concerned Wall Street. In a series of reports this morning, analysts said they expected that co-founder Larry Page would be just as effective — if not more so — than Schmidt in the CEO role. The company’s stock, meanwhile, is down just over one percent. Read on for a sampling of some of the analyst commentary.

Meggan Friedman, William Blair: We believe this move reflects Google’s solid market position and its maturity as a company. In addition, as Google increasingly comes under the scrutiny of governmental bodies, given its size and market dominance, we believe there is long-term benefit in having Schmidt dedicate his efforts to strategic issues including government relations. The move also indicates the company believes Mr. Page, who was just 27 when Mr. Schmidt was appointed CEO in August 2001, is now ready to assume the reigns of the company.

Colin Gillis, BGC: Given that non-operational risks have been building for Google over the last year, including increased government scrutiny of Google’s acquisitions, privacy policies, and search algorithm rankings it is a positive for Google to increase outreach. Additionally, Google could use a softer touch in working with content partners for services such as its Google TV product, and any potential music streaming services. While Google certainly has grown during Eric Schmidt’s tenure as CEO, a case can also be made that the company has not built any new material revenue streams, was late to building for the mobile market, has no effective social solutions, overbuilt its headcount, and placed itself in the crosshairs of government regulators.

Douglas Anmuth, Barclays Capital: We still think Google will be run in a similar manner as it is today, and mostly by the same people. While Larry Page has not been outwardly visible to investors, we believe he’s played a key role in strategic decisions and the overall direction of the company. Additionally, we believe Eric Schmidt will remain engaged in higher level decisions through his Executive Chairman role and Google has a handful of strong senior executives to help run the company.

Sandeep Aggarwal, Caris & Co.: … We do not view CEO Schmidt’s new role as Executive Chairman and Co-Founder Page’s new role as CEO as negative developments. In our view, CEO Schmidt very effectively spearheaded Google to become one of the largest and most innovative technology companies of our times and we expect Larry Page to be an equally effective CEO of Google.

Jordan Rohan, Stifel Nicolaus: Many investors do not know what to make of the news that Larry Page will be Google’s CEO now. Our thoughts: 1) Management transitions like this are often met with skepticism, even if they ultimately work out beautifully — Remember Eisner to Iger? — and it is nearly impossible to anticipate how well an executive will do in the role of CEO. In this case, the plan seems logical. 2) Google has a very strong culture, led in large part by the intellect and spirit of Page and Brin. Elevating Page to CEO, if that is what happened, seems like a much better decision than bringing in an outside candidate who may not understand the culture.

Mark Mahaney, Citigroup: We think this has been long planned and view the change as about as smooth (management) change as can be…. We believe Larry Page has been groomed for the role of CEO, and we don’t expect any dramatic changes to Google’s core strategies around Search, Mobile, Display and Enterprise.

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