SAN FRANCISCO (Reuters) - Google Inc CEO Eric Schmidt will step aside and make way for co-founder Larry Page to take the reins, in a surprise announcement that came as the company reported better-than-expected quarterly results.
Shares in the Internet search and advertising leader rose about 2 percent to $639 in extended trading.
Page, who co-founded Google with Sergey Brin, will take charge of day-to-day operations as chief executive. Schmidt, who became CEO in 2001 to bring more management experience to the young company, will assume the role of executive chairman, focusing on deals and government outreach, among other things. Brin will concentrate on strategic projects.
"Day-to-day adult supervision no longer needed!" Schmidt tweeted after the announcement.
The abrupt shift comes days after Apple Inc CEO Steve Jobs announced a leave of absence, leaving lieutenant Tim Cook in charge of day-to-day operations. Like Google, Apple also announced results this week that blew past Wall Street's estimates.
"The Street will think it's a negative, that there is probably some issue going on. Google is trying to get more efficient and trying to get a tech guy in the seat to compete with Facebook," said UBS analyst Brian Pitz. "I don't think it changes anything strategically where the company is headed."
Google said the management change was made as part of a plan to "streamline" decision making and create clearer lines of responsibility and accountability at the top.
It said Schmidt plans to sell about 534,000 shares of Class A common stock. Based on Google's closing share price of $626.77 on Thursday, he would earn about $334.7 million on the stock sale. He would still own about 2.7 percent of Google's outstanding capital stock, down from 2.9 percent before selling the shares.
"As Google has grown, managing the business has become more complicated. So Larry, Sergey and I have been talking for a long time about how best to simplify our management structure and speed up decision making," Schmidt said in a posting on the company's official blog.
"And over the holidays we decided now was the right moment to make some changes to the way we are structured."
Google also reported fourth-quarter financial results, beating Wall Street's net revenue expectations.
Net revenue, excluding fees paid to partner websites, was $6.37 billion. Analysts polled by Thomson Reuters I/B/E/S, on average, were expecting net revenue of $6.06 billion.
Google posted net income, excluding items, of $8.75 a share, outstripping Wall Street's average forecast of $8.10.
Schmidt said on his blogpost that Page will now lead product development and technology strategy, areas that are "his greatest strengths."
"It will be interesting to see what he'll do that's different, what he could not have done in his prior role," said BGC Partners analyst Colin Gillis.
© 2013 Thomson/Reuters. All rights reserved.