Google names former Novell chief as CEO

Andrea Orr

PALO ALTO: Internet search engine Google Inc. on Monday named former Novell

Inc. Chief Executive Eric Schmidt as its new CEO and disclosed that it had

earned a net profit in the second quarter.

Google, a high-profile Silicon Valley startup that has won multiple awards

for its Internet search technology, had not previously revealed much detail

about its financial results, leading to concern its business could be suffering

even as its popularity soared.

But in an interview Monday, Schmidt said that along with achieving a net

profit in the last quarter, Google had shown an operating profit in the past two

quarters. And he stressed that the company had done more than just squeak by.

"We are quite profitable," he said. "We are not one of those

companies that reached profitability because we didn't buy any pencils during

the quarter."

With that disclosure, Google joins the elite list of Internet companies,

including eBay Inc and Priceline.com Inc, that have managed to make money. It is

on an even shorter list of companies making money from online advertising. The

once profitable Yahoo! Inc., which gets most of its revenue from advertising,

started losing money this year after the ad market sank.

Still, Google has a lot of work ahead of it as it expands its business and

enlarges to accommodate an ever-growing volume of Internet content.

Beyond seat of pants management



Google, one of the few Silicon Valley companies that has not cut back on
perks like free gourmet meals and is still expanding its staff, has been

searching for the past year for a seasoned leader to succeed founders Larry Page

and Sergey Brin. The two started the company while they were still students at

Stanford University, and are better recognized for their knowledge of computers

than their management know-how.

"Currently it is a challenge of managing the growth," said Schmidt,

who also served as chief executive of Sun Microsystems Inc. before he worked at

Novell. "The company is used to being run sort of like a raw startup where

everybody runs around like crazy. It has to have a business planning process in

place."

Schmidt, whose efforts to reverse sagging results at Novell met with mixed

results, said he was relieved to not be inheriting another turnaround situation.

He said Google's challenges mostly related to its fast growth.

Google is working to expand beyond the 1.3 billion Web pages it currently has

indexed, and, he said, it sees many ways improve search results, such as making

new Internet content show up in searches within hours after it is posted, rather

than the current lag time of at least a couple of days.

Although Schmidt said he was drawn to the company's tight-knit startup

culture, he said Google needs to consider its future beyond a two or three

hundred person operation bound by tight working quarters and communal roller

hockey games.

"I've seen the problems of scale, of getting everybody pointed in the

same direction," he said, adding that Google's management style was still a

bit "by the seat of the pants." Schmidt said Google still had no near

term plans of going public, preferring to wait out the difficult market for

initial public offerings. But he said it was always open to considering new

sources of revenue.

The company currently gets about half of its revenue by selling its search

technology to other search engines like Yahoo, and brings in the rest from

advertising.

Although advertising is generally one of the most depressed sectors of the

Internet industry, Google said it has fared well by selling listings that appear

along with regular search results and help advertisers reach a highly targeted

audience.

(C) Reuters Limited 2001.