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Ex-Google CEO Steps Down as Alphabet Shares Fall

Updated: May 10, 2019



Erich Schmidt, the tech hand expert who is also known as the former CEO of Google is leaving the board of parent company, Alphabet. The 64-year-old man joined the board in 2001 before later becoming the company’s CEO. After holding a seat for 18 years, Schmidt will no longer seek for re-election to the board after his period expires on June 19th, 2019. Schmidt said that he leaves the company to help “the next generation of talent to serve”. However, Alphabet has confirmed that he would remain as a technical adviser to Google and Alphabet. However, the news was not really a surprise as Schmidt has stepped down as Executive Chairman on Alphabet’s board of directors in 2017. The resignation follows a couple of situation that have led shareholders to question the board’s management, including the fact that recently Google’s stock has dropped more than 7%.


The recent case revolves around how Andy Rubin, the founder of Android, had received a $90 million payout upon leaving the company despite having a credible complaint of sexual misconduct against him from another Google employee. The story, which included several other examples of male Google executives receiving multimillion-dollar payouts after being accused of sexual harassment, sparked a fuss inside the company that led to 20,000 employees walking out of the job. As a result, Alphabet made a handful of claims in response, including a move to end the practice of forcing employees to settle sexual harassment complaints through arbitration rather than lawsuits. Furthermore, Alphabet is also reporting the fact that it has beaten analyst earnings expectations with a first-quarter profit of $8.3 billion. However, the company’s revenue fell below expectations, including the $1.7 billion fine levied by the European Commission over Google AdSense violations. Thus, Alphabet’s profit of $6.7 billion fell short of analyst estimates. These numbers range from January to March, and did not meet analysis expectations with the stock down over 4% in after-hours trading.


Moreover, Google is essentially observing decelerating growth after regularly expanding at 20% or more in prior periods. Also, its revenue growth decreased from 28% in the earlier year to 17% this year. Ad sales growth also experienced a decrease in growth from 24% last year to 15% only this year. As a result, there is quite a significant slowdown in Google’s ad revenue in Q1 this year. These problems only mean that Google properties are not growing traffic volumes quickly to fix for declines in advertising prices. In conclusion, it is certainly going to be a tough year for Google and its parent company, Alphabet.


Source:

BBC

Bloomberg

CNBC


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