Google co-founder Page takes over, shares climb

SAN FRANCISCO - 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 (NASDAQ: GOOG - news) 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, focussing 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 (NASDAQ: AAPL - news) 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 (DJCI - news) 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 (£210.4 billion) 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 (Berlin: NETK.BE - news) 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.

China rate concerns roil stocks, commodities fall

NEW YORK - Global equities and commodity prices fell on Thursday after robust Chinese economic growth prompted fears the world's second-largest economy would try to choke off excessive demand that is fuelling inflation.

Fears China would tighten monetary policy were felt across multiple asset classes after the country's fourth-quarter gross domestic product soared past forecasts, rising to 9.8 percent.

A rise in U.S. financial shares, led by Morgan Stanley (DWDF.EX - news) , helped cut Wall Street's losses, although all three major indexes fell. A disappointing outlook for F5 Networks (NASDAQ: FFIV - news) -- a leader in so-called cloud computing to move information away from desktops and into remote centres -- contributed a negative counterweight that dragged the Nasdaq (NASDAQ: news) market lower.

"The tug of war continued during the course of the day with techs and financials -- the two big behemoths in terms of bellwethers for the market -- slugging it out," Joseph Benanti, managing director of Rosenblatt Securities in New York said about the U.S. stock market moves.

"We had a lot of movement on hot news that will subside. Cloud stocks are important, but they are not going to drive all technology. And the financials are a bigger sector to follow and are starting to hold their own."

The losses, while minor, extended Wednesday's intraday decline for the broad S&P 500 (news) stock index, the worst in nearly two months.

At the close, the Dow Jones (news) industrial average fell 2.49 points, or 0.02 percent, to 11,822.80. The Standard & Poor's 500 Index lost 1.66 points, or 0.13 percent, at 1,280.26. The Nasdaq Composite Index dropped 21.07 points, or 0.77 percent, at 2,704.29.

On the plus side, shares in No. 2 U.S. investment bank Morgan Stanley , which posted a 60 percent increase in quarterly profit, rose 4.57 percent to $29.02 a share.

Among the U.S. networking/cloud stocks, F5 Networks fell 21.35 percent to $109.15 on weaker-than-expected quarterly revenue and a gloomy forecast. [ID:nSGE70H0CM]

Hit (026180.KQ - news) hard however by expectations China will ramp up anti-inflationary measures were emerging market equities, down 1.55 percent . Materials, mining and car companies fell on concern demand from China's factories may slacken.

Freeport-McMoRan Copper & Gold Inc lost 3.7 percent to $110.90 after the copper producer trimmed its sales forecast and said costs would rise. Ford Motor (F.SW - news) fell 0.67 percent

The pan-European FTSEurofirst 300 index of top shares closed down 1.11 percent at 1,139.63 points - its lowest since January 11.

Japan (NYSE: MCO - news) 's Nikkei (news) closed 1.1 percent lower on Thursday. However, futures trading in Chicago pointed to a stronger open in Tokyo on Friday, up 15.00 at 10,500.

Oil prices fell $2 to settle at $88.86 a barrel in New York. Copper had its worst day in two months.

Spot gold fell $24.41, or 1.78 percent, to a two-month low of $1,345.40.

DOLLAR GAINS

A stronger-than-expected rise in existing home sales and a fall in new claims for jobless benefits could not boost U.S. stocks but did help lift the U.S. dollar.

The euro managed to grab the edge back from the U.S. dollar in late day trade, but the greenback advanced against a broad basket of currencies made up of its major trading partners, including the yen.

Earlier on Thursday, the euro was supported by expectations the European Union would come up with a comprehensive plan to help debt-laden countries finance their overwhelming obligations.

The euro rose 0.04 percent at $1.3471.

"We are finally seeing some growth and we have to at least think about when the Federal Reserve will (tighten) policy, even though it won't happen soon," said Jens Nordvig, global head of G10 FX strategy at Nomura.

As such, "it's possible to make money from a broad-based dollar exposure through a basket including yen, the Aussie and Canadian dollars and sterling," he said. The greenback has struggled against all those currencies in recent months.

The U.S. dollar index climbed 0.22 percent , while the greenback rose 1.16 percent to 83.1 yen.

Against the Swiss franc, the dollar gained more than 1 percent to 0.9673 francs.

The benchmark 10-year U.S. Treasuries fell 28/32, pushing the yield up to 3.45 percent. The price decline accelerated after a poorly received $13 billion sale of inflation-protected Treasuries.

Ofcom calls for BT cuts over rural internet

BT suffered a setback as the telecoms regulator Ofcom proposed cuts in the price of its wholesale products.

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Ofcom wants BT to reduce the price of its wholesale broadband products in order to improve internet access in rural areas.

The regulator also outlined a lower-than-expected estimate of BT’s cost of capital – the assumption of what it costs BT to fund its business. UBS analysts said that could cut BT’s earnings by up to 8 per cent. Shares in the telecoms company fell 2.7p to close at 176.6p.

Ofcom is aiming to ensure that broadband prices fall for consumers in rural areas and, potentially, to increase download speeds available to them.

To achieve this, it is proposing that BT should cut the price of wholesale broadband products in parts of Scotland, Wales and Northern Ireland, together with certain English rural areas.

Those are all areas where BT is the sole provider of wholesale broadband services: mainly places not covered by infrastructure owned by Virgin Media, TalkTalk or British Sky Broadcasting. In those areas, Ofcom is proposing annual cuts in the price of BT’s wholesale broadband products of between 11 per cent and 15 per cent over the next three years, after inflation.

Ofcom’s calculations of its price controls for BT are partly based on its estimate of the company’s cost of capital.

It proposed a lower cost of capital for BT Openreach, the subsidiary that provides the company’s rivals with access to its fixed-line connections running to homes and offices.

The regulator reduced BT Openreach’s weighted cost of capital from 10.1 per cent in May 2009 to 8.6 per cent in January 2011, partly to reflect lower interest rates. Analysts said this would in turn cut the price of the subsidiary’s wholesale products across the country.

UBS analysts said the lower cost of capital could reduce BT’s wholesale revenue by £50m in 2013-14 and cut group earnings by 3 per cent. TalkTalk, and other companies that use BT Openreach’s products, could pass on any reduction in its wholesale charges to their customers. In these circumstances, BT Retail might feel obliged to make a similar move. If it did, group revenue could be cut by £150m in 2013-14. Earnings could decline by 8 per cent.

BT said Ofcom’s proposed cost of capital for BT Openreach could reduce annual wholesale revenue by “low tens of millions” of pounds. It added that the regulator’s price controls for its wholesale broadband products should “strike the right balance between control and incentives to invest in rural areas”.

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Lupus Capital sees higher sales

Lupus Capital forecast a 10 percent rise in full-year sales, driven by strong demand in its building products unit, but said it does not expect end market conditions to improve materially in the United States and UK in 2011.

British construction activity contracted last month for the first time since February, reinforcing fears that the sector will no longer be able to drive the recovery in the way it did for much of last year.

The company, which focuses on the British and U.S. residential housing markets, said it expects 2010 full-year sales of about 266 million pounds, compared with 241.6 million pounds in 2009. Building products sales rose 10 percent to 252 million pounds.

Two analysts on average expect the company to post full-year sales of 250.3 million pounds, according to Thomson Reuters I/B/E/S.

In September, the company had forecast full-year results ahead of market expectations and posted a 68 percent rise in its first-half pretax profit, as customers in North America restocked inventories.

Lupus shares, which have gained about 18 percent over the past three months, closed at 129.75 pence on Thursday on the London Stock Exchange (LSE: LSE.L - news) .

Google's Larry Page become CEO

Google beat Wall Street's quarterly sales and profit estimates, and announced that co-founder Larry Page would take on the role of chief executive. This is how the market viewed the move.

JOE KINAHAN, CHIEF DERIVATIVES STRATEGIST, TD AMERITRADE (NASDAQ: AMTD - news)

"Obviously, the Street has a good view of this executive change. If this were a negative, no matter how good the earnings, the stock would have been down."

BRIAN PITZ, ANALYST, UBS (SPGH - news)

"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."

MIKE HICKEY, ANALYST, JANCO PARTNERS

"When you see an executive change, you hesitate because generally, it's a disruption at the top. Obviously the numbers look good, so it's a balance between the two. "

COLIN GILLIS, ANALYST, BGC PARTNERS

"It's not like Larry (Page) wasn't there. He's not fresh blood. But it will be interesting to see what he'll do that's different, what he could not have done in his prior role."

Steve Jobs steps aside as Apple profits soar

Apple Inc (NASDAQ: AAPL - news) . chief Steve Jobs stepped aside on a high note as the company he saved from ruin raked in a blockbuster $6-billion profit amid unrelenting demand for iPhones and iPads.

A day after Jobs announced he was taking an indefinite leave of absence for medical reasons, Apple reported its record net profit as revenue soared to an unprecedented $26.74 billion in the quarter ending December 31.

The Cupertino, California-based company said it sold 7.33 million iPad tablet computers and 16.24 million iPhones.

"We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales," Jobs said in a statement accompanying the earnings report.

"We are firing on all cylinders and we've got some exciting things in the pipeline for this year including iPhone 4 on Verizon (NYSE: VZ - news) , which customers can't wait to get their hands on."

He chose Monday, a US holiday on which stock markets were closed, to announce that he was turning the Apple helm over to chief operating officer Timothy Cook.

Jobs will keep his chief executive title and participate in "major strategic decisions" at Apple.

Apple shares fell Tuesday as concerns for Jobs health raised questions about the company's future.

Record (LSE: REC.L - news) high quarterly earnings figures and assurances by Cook that the company saw boom times ahead with its coveted gadgets helped the stock recover some ground.

Apple shares rose slightly more than a percent to $344.90 a share in trading that followed the earnings release but remained down in price for the day, after closing at a record high of $348.48 in New York (Xetra: A0DKRK - news) on Friday.

The company is "working around the clock" to increase the supply of its hot-selling iPhones, and has already seen more than 80 percent of major companies begin letting workers use iPad tablet computers for business, Cook said.

Apple revenue soared 67 percent in the Asia Pacific (news) market, with the company taking in $2.6 billion dollars in China in the quarter, he added.

In announcing he was going on medical leave, his third since 2004, the 55-year-old Jobs did not say how long he expected to be away or provide any details about his latest health issues.

Jobs underwent an operation for pancreatic cancer in 2004 and received a liver transplant in early 2009. He has appeared gaunt but relatively healthy at recent Apple public events.

Cook, 50, has filled in for Jobs in the past, with Apple thriving.

He is part of a powerful team of executives stepping in to fill the shoes of Jobs, the charismatic heart and soul of Apple who some believe is irreplaceable.

"At the end of the day, there is more to Apple than Steve," said analyst Michael Gartenberg, a partner at Altimeter Group.

"These are all people who have been trained by Steve, worked closely with Steve and are the embodiment of Apple's core culture."

Analyst Rob Enderle of Silicon Valley's Enderle Group said Jobs's absence will be felt on strategic questions such as "what will Apple do next?"

"The challenge is what comes after the iPad," Enderle said.

"Apple without Steve Jobs didn't have the magic," he said of the previous occasions when Jobs stepped aside for health reasons. "It was lacking this little something."

Product plans are typically mapped out two years in advance, so possible launches of successors to the iPhone and iPad later this year would not change with Jobs absent.

As chief operating officer, Cook has been in charge of end-to-end management of Apple's supply chain, sales, service and support in all countries.

"Cook is the person who makes the trains run on time at Apple," Gartenberg said.

Apple's fortunes have been uniquely linked to Jobs, who returned to the then flagging company in 1997 after a 12-year absence and introduced innovative and wildly successful products like the iPod, iPhone and iPad.

Apple has sold approximately 14.79 million iPads since the tablet computers hit the market in April, according to a tally of figures made public in earnings releases.

"I have great confidence that Tim and the rest of the executive management team will do a terrific job executing the exciting plans we have in place for 2011," Jobs said.

Iberdrola set to buy Brazil's Elektro

Iberdrola , Spain's biggest power utility, is set to announce on Thursday the €2.4bn ($3.2bn) cash acquisition of Brazil's Elektro (EKTR3.SA - news) from Ashmore Energy International (AEI (A18.SI - news) ) in the latest stage of its drive to expand in growing markets, according to people familiar with the deal.

Like other Spanish multinationals before it - such as the banks Santander (Madrid: SAN.MC - news) and BBVA (Madrid: BBVA.MC - news) , and Telefónica, the telecoms group - Iberdrola has invested heavily in Latin America and wants to further reduce its dependence upon the sluggish Spanish domestic market.

Iberdrola executives say that the purchase of Elektro, a distribution company which serves 2.2m clients in Sao Paulo state, will turn the Spanish group into one of the leading operators in Brazil's electricity sector.

It will also consolidate the company's already strong overall position in north-eastern Brazil.

Elektro is expected to be integrated into Neoenergia, an affiliate in which Iberdrola holds 39 per cent, while Previ, the pension fund for government-controlled Banco do Brasil (BBAS11.SA - news) , has 49 per cent and the bank itself holds the remaining 12 per cent.

Earlier this month, Iberdrola denied reports that it planned a broader deal to buy AEI's Latin American assets for $8bn. AEI, previously the international energy unit of Enron, is controlled by London-based Ashmore (LSE: ASHM.L - news) , the emerging market investment fund group.

Iberdrola will announce on Thursday that its use of cash to make the purchase of Elektro is "a new demonstration of Iberdrola's financial strength and its access to liquidity".

For Iberdrola, the operation accords with its strategy of international expansion in markets with particular potential - such as those of the US, Brazil, the UK and Mexico - and thus of diversifying geographically while simultaneously increasing its exposure to predictable and low-risk regulated businesses.

In 2009, Elektro produced earnings before interest, tax, depreciation and amortisation of €335m and net profit of €215m.

Last month, Credit Suisse (CSMA - news) criticised the terms of a deal in which a consortium that was led by Neoenergia and Eletrobras won a contract to build Brazil's new 1,820-megawatt Teles Pires hydroelectric plant and dam.

Expected returns for the deal, according to Credit Suisse analysts, "do not look particularly attractive to us".

Iberdrola says that it made nearly €500m in ebitda in Brazil in 2009, more than 7 per cent of the group total.

In the first nine months of last year, Iberdrola's overall net profit rose 2 per cent to €2.07bn from the same period of the previous year, with nearly two-thirds of profit coming from outside of Spain.