Former Google CEO Eric Schmidt steps down from parent firm Alphabet just a day after $66billion was wiped off its value amid advertiser revolt over ‘harmful content’ on YouTube
- Schmidt stepped down as chairman of the Alphabet board last year
- He will now leave his role on the board of Google’s parent company
- It comes as Google battles a variety of issues including employee turmoil
- Earnings reports resealed yesterday wiped $9 billion from the net worth of Schmidt and fellow Google bosses Larry Page and Sergey Brin
Ex-Google CEO Eric Schmidt is set to leave the board of the tech giant’s parent firm Alphabet later this year.
It comes just one day after a historically poor day for Alphabet where the firm – which runs Google, YouTube and Boston Dynamics – saw its share prices plunge.
Alphabet shares dropped by as much as 8.6 per cent yesterday, wiping more than $66billion from the company’s value and marking the steepest drop since October 2012.
The firm’s shares rebounded a little, but still sit 7.5 per cent lower than they were earlier in the week.
Slowing revenue growth caused by brands pulling ads from YouTube amid concerns over the site’s ‘harmful content’ saw Alphabet endure one of its worst financial periods in years.
Google founders Larry Page, Sergey Brin and Eric Schmidt had about $9 billion wiped from their collective net worth as the stock plunged in early trading yesterday.
Schmidt, who turned 64 this month, stepped down as chairman at the start of last year, remaining a member but shifting to a role as a technical advisor.
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Schmidt (pictured) was on the board of Alphabet for more than 18 years, joining in March 2001. He was chief executive of Google from the middle of that same year until March 2011
Schmidt will not seek re-election to the board when his term expires in June, but will continue to advise on technical matters, according to Alphabet.
‘Eric has made an extraordinary contribution to Google and Alphabet as CEO, chairman, and board member,’ board chairman John Hennessy said in a statement.
‘We are extremely grateful for his guidance and leadership over many years.’
Schmidt was on the board for more than 18 years, joining in March 2001. He was chief executive of Google from the middle of that same year until March 2011.
Google founders Larry Page and Sergey Brin recruited the proven businessman and skilled software engineer as chief executive in 2001, bringing a mature hand to the helm of the then three-year-old internet search company.
Schmidt, Page and Brin were considered a powerful trio and Page replaced Schmidt as chief executive a decade later.
Google unveiled a surprise corporate overhaul in 2015, forming a new parent company dubbed Alphabet to include internet search and a handful of independent companies.
Page became chief executive at Alphabet, a holding company for the tech giant’s search products and ‘other bets’ such Waymo self-driving car unit and Google Fiber internet service.
Schmidt (Middle), Page (right)and Brin (left) were considered a power triumvirate in control of Google. Page replaced Schmidt as chief executive a decade later. The Google co-founders had about $9 billion wiped from their collective net worths as the stock plunged in early trading
A BRIEF HISTORY OF ERIC SCHMIDT’S TIME AT GOOGLE
March 2001
Novell Inc. CEO Eric Schmidt is named Google chairman. Schmidt was chief technology officer and corporate executive officer at Sun Microsystems Inc. before taking the reins at Novell four years earlier.
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August 2001
Schmidt is named CEO of Google, as early investors insist on bringing grown-up leadership to the rapidly growing company.
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April 2004
Google files papers for initial public offering of stock.
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October 2006
Google announces deal to buy YouTube, now one of the world’s most popular video sites.
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April 2007
Google announces plans to acquire ad company DoubleClick, expanding Google’s advertising ambitions.
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August 2009
Schmidt resigns from Apple’s board as competition between the one-time allies heats up.
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March 2010
Google moves its Chinese search engine outside mainland China amid dispute over censorship policies, as founders Larry Page and Sergey Brin overrule Schmidt’s wishes.
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January 2011
Schmidt makes a surprise announcement that he’s stepping aside for Page to become chief executive. In a Twitter post, Schmidt writes, “Day-to-day adult supervision no longer needed!” Schmidt stays on as executive chairman.
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April 2011
Schmidt drops title of CEO and becomes executive chairman. In that role, he will serve as adviser and handle broader tasks such as business partnerships and government outreach – important as Google faces growing regulatory scrutiny in the U.S. and Europe.
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January 2013
Schmidt makes four-day visit to North Korea, a country with one of the world’s most restrictive internet policies. The visit takes place despite opposition from the U.S. government. Schmidt is accompanied by former New Mexico Gov. Bill Richardson and Jared Cohen, the head of Google’s innovation think-tank. Sen. John McCain, an Arizona Republican, calls the delegation “useful idiots” on his Twitter account.
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October 2015
Schmidt becomes executive chairman of Alphabet Inc., a new holding company formed in the separation of Google from projects, or “bets.”
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December 2017
Alphabet says Schmidt is stepping down as executive chairman. He will become a technical adviser and still sit on the board.
Sundar Pichai was promoted to chief of Google.
Schmidt was at Google’s helm during pivotal years during which it grew into an online advertising and search juggernaut, the company name becoming a verb in the process.
When stepping down as chairman of the board, Schmidt said he intended to spend more time on philanthropic, scientific and technology endeavours.
On Monday afternoon, Alphabet reported first quarter sales of $29.5 billion, missing expectations, and advertising revenue growth of 15 per cent, the slowest pace since 2015.
The chart above shows the percentage change in Alphabet’s quarterly revenue from the same period year prior. Q1 2019 marked the lowest level of growth for the company since 2015
A five-day view of Alphabet’s share price as of noon on Tuesday shows a sharp drop in price
Alphabet’s share price has grown steadily since the beginning of the year (above), but took a sharp hit on Tuesday after the company reported results that missed expectations
Alphabet’s chief financial officer said that a ‘deceleration’ in clicks on its YouTube unit, a main driver for its ad revenue, was partially to blame.
YouTube has recently come under fire amid concern that it does not effectively control videos posted and promoted on the site.
The Google subsidiary has faced continued pressure from advertisers to tighten regulations so that they do not appear to be sponsoring adult or offensive content.
Some major brands have stopped advertising on YouTube following revelations that some adverts were being run next to terrorist content, ‘fake news’ and disturbing videos.
Advertising revenue, a key moneymaker for Google, grew by 15 per cent to $30.7 billion, but still failed to meet analyst expectations.
Increased ad competition from rivals Amazon and Facebook and dips in its smartphone business have been cited as part of the reason for the slowing growth.
This chart shows quarterly growth in ad revenue over the same period year prior. For the quarter ending March 31, Google’s ad revenue grew 15 per cent, the slowest pace since 2015
HOW HAVE ALPHABET’S FORTUNES CHANGED OVER THE YEARS?
Alphabet, Google’s parent company, is an American multinational conglomerate company headquartered in Mountain View, California.
The company, incorporated on July 23, 2015, is a holding company.
The company’s segments include Google Inc. and its ‘Other Bets’, including Access, Calico, CapitalC, GV, Nest, Verily – a life sciences research organisation, self-driving car-hailing service Waymo, Nest products and services (a smart thermostat firm) and X, a ‘moonshot’ company aimed at launching technologies to ‘make the world a radically better place.’
On July 8, 2015, Google’s stock prices were priced at $541.7.
But in the lead up to the formation of Alphabet, stock prices surged to $699.62 on July 17, 2015 – an increase of 28.45%.
Logo with signage in front of Building 44, which houses employees working on the Android mobile phone operating system, at the Googleplex, headquarters of Google Inc in the Silicon Valley town of Mountain View, California
From July 9, 2015 to January 30, 2018, Alphabet’s stock prices rose by 116%.
Alphabet’s current stock price is $1,181.59, although the tech giant’s shares slid 2.3% in after-hours trade on February 1, 2018 following Alphabet’s reported loss of $3 billion (£2.1bn) for the fourth quarter of 2017, as it set aside $11 billion for taxes – an estimated $9.9 billion (£6.9bn) was for taxes on repatriated earnings.
The vast majority of Alphabet’s revenue continues to come from Google and its various business, most notably its advertising network – revenue from Google’s ad business grew by 21 per cent from last year and accounts for 84 per cent of Alphabet’s total revenue.
However, the company’s so-called Other Bets saw revenues rise from $262 million (£183m) last year to $409 million (£286m) in the last quarter.
Source: MacroTrends.net
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