The Ruth Porat era at Google is off to a promising start. In late May, Porat signed on as Google’s CFO after serving the same role for Morgan Stanley for five years. Since then, Google has adopted a new structure, renamed itself Alphabet, and delivered two earnings reports that have left investors in a giddy mood.
In July, Google reported a profit well above Wall Street’s estimates, driving the stock 14 percent higher. This week, Google again beat its revenue and profit estimates, pushing the stock up as high as 10.5 percent to an all-time high of $ 752 a share. The earnings beat may not have been quite as impressive this time, but Porat had another treat for investors, a plan to buy back $ 5.1 billion of Google shares.
Actually, Google announced a plan to buy back $ 5,099,019,513.59 worth of its stock (here’s the reason for that figure, but be warned: there is such a thing as a too-cute math joke). Technically, it’s not Google’s first buyback. In the past, Google has repurchased shares following an all-stock acquisition like the AdMob deal in 2009.
This larger buyback program marks a shift toward the model Apple and older, cash-rich tech giants have employed of returning more profits to shareholders. After all, Google has $ 73 billion in cash. It’s the kind of investor payout some on Wall Street have been pushing for for a while. Some estimated such a move would drive up its share price by 10 percent overnight. Which is very close to what happened last night…