Google names co-founder Larry Page as CEO

(01-20) 14:56 PST San Francisco -- Continuing a veritable changing of the guard across Silicon Valley this week, Google announced Thursday that co-founder Larry Page will become chief executive of the online search giant, replacing Eric Schmidt in a surprise management shakeup.

The news closely follows Apple's revelation on Monday that CEO Steve Jobs would go on an indefinite medical leave, with Chief Operating Officer Tim Cook assuming day-to-day control. Also on Thursday, Hewlett-Packard appointed five new directors, including former eBay CEO and gubernatorial candidate Meg Whitman, as four stepped down.

Page, 37, will move into his new role at the Mountain View technology colossus on April 4, assuming control of the business that he began developing with Sergey Brin when they were Stanford University computer science doctoral students in 1996.

He's taking the helm at a critical juncture for the company. It continues to deliver blockbuster financial results, as underlined by its fourth-quarter numbers also released Thursday. Meanwhile, it is beefing up staff, gobbling up innovative startups and staying on top of the defining trends in technology, including the fast transition to mobile devices.

Market pressures

But Google also faces mounting pressure over accusations that it abuses its online search dominance, notably a broad antitrust inquiry begun by the European Commission late last year, as well as wide-ranging privacy complaints. In addition, it has proved largely incapable of responding to the rise of social networking, as companies like Facebook and Twitter quickly seized alternative onramps to the Internet.

How Page, and Google, respond to these challenges may well define the company's future.

"He's going to have to show the ability to adapt to new competitive threats and to the changing Internet landscape," said Clayton Moran, financial analyst at Benchmark Co., an investment bank. "First and foremost, he's going to have to show that he's a polished leader, capable of taking control of a company that has a $200 billion valuation."

Shares of Google climbed 1.3 percent to $635 in after-hours trading, following the announcement.

Schmidt, who was named Google's CEO in 2001, will assume the role of executive chairman, focusing on deals, partnerships, customers and what will be the all-important government outreach. He will continue to act as an adviser to Page and Brin.

Brin will work on strategic projects, specifically new products, which he declined to specify during an investor conference call Thursday.

On the call, Schmidt said the three men had a long series of discussions about the appropriate management structure, and concluded that their overlapping authority was adding delays to the decision-making process.

"I don't anticipate any material change in our strategies, but I do believe we, as a result of this, will operate and execute the business even (better)," he said.

Industry observers, however, were scratching their heads about the timing of the shakeup, as the company continues to deliver impressive financial results.

Google reported revenue of $8.4 billion for the quarter, up 26 percent from a year earlier. Net income was $2.54 billion ($7.81 per share), up from $1.97 billion ($6.13). On an adjusted basis, which excluded stock-based compensation expenses, earnings were $8.75 per share.

The revenue and adjusted earnings both beat Wall Street expectations, which were $6.06 billion and $8.09 per share, according to Thomson Financial Network.

Theories about what was behind the sudden management shift abounded on Thursday, ranging from some of Schmidt's recent public gaffes about privacy issues, to the European Commission's investigation and increasing regulatory scrutiny in the United States, to possible strategic differences among the three executives.