Facebook Hires Google Exec, Hitting Google SharesBy Reuters - | Posted 2008-03-04 Email Print
Facebook gets Google's COO while hitting its first 52-week low since its IPO.
SAN FRANCISCO (Reuters) - Facebook said on Tuesday it had named Google Inc's global sales head, Sheryl Sandberg, as the social networking site's new chief operations officer, accelerating a decline in Google shares to year lows.
Google shares slid as much as 4.6 percent, trading below a 52-week low for the first time since its IPO and removing a technical crutch that had supported the stock.
The departure of Sandberg, who in six years at Google was instrumental in developing its fast-growing online advertising business, marks one of the first senior executives at the Web search leader to leave since its sensational initial public offering in August 2004.
"Sandberg's departure is a significant loss for Google," RBC Capital analyst Jordan Rohan said. "It signals that the company has reached a level of scale and bureaucracy with which some early Google employees are uncomfortable."
"It is a significant move," Oppenheimer analyst Sandeep Aggarwal agreed. "This could be the start of others leaving."
Chief Financial Officer George Reyes said he would retire last August, the three-year anniversary of Google's IPO, when pre-IPO stock options had fully vested for executives. Reyes remains at Google as it seeks to hire a replacement.
Symbolically, Sandberg's hiring represents a passing of the crown as Silicon Valley's hottest start-up from Google to Facebook, which has gained momentum over the past year.
"While there is no comparison between Google and Facebook in revenue terms, Facebook, in terms of popularity and impact, has a very similar profile to the pre-IPO Google," Aggarwal said.
Facebook was founded in 2004 as a social site for students at Harvard University and spread quickly to other colleges and eventually into workplaces. Its popularity stems from how the site conveniently allows users to share details of their lives with selected friends online.
Google reported $16.6 billion in 2007 revenue, virtually all of it from online advertising sales generated under Sandberg's leadership.
By contrast, Facebook, which is privately held and does not disclose revenue, was estimated by one of its backers last year to generate revenue of little more than $100 million.
Sandberg will be responsible for helping Facebook expand its operations and its presence globally, the Palo Alto, California-based company said in a statement.
She will manage sales, marketing, business development, human resources, public policy, privacy issues and communications and will report directly to Facebook Chief Executive Mark Zuckerberg, the company said.
Sandberg was vice president of global online sales and operations at Google. She was in charge of developing the main sales channels for Google, its AdWords and AdSense online advertising services.
Prior to Google, she was chief of staff to U.S. Treasury Secretary Larry Summers in the Clinton administration.
Google's stock fell as low as $435.78 in heavy trade amid a broad drop in technology shares after a profit warning from Intel Corp. Google slid below its 52-week low of $437, set nearly one year ago on March 5, 2007.
The stock move bookmarks the latest chapter in a sharp reversal of fortune for Google and its shareholders since the stock hit a record high early last November.
Just four months ago, Google had a stock-market value exceeding $232 billion and a share price approaching $750 after more than three years of unchecked gains. Its market capitalization has sunk to $139 billion at Tuesday prices.
"Falling below the 52-week level is a psychologically important barrier," said Aggarwal, who recommends investors continue to buy Google shares, saying they will outperform the market. But he cautioned that "negative sentiments appear to be increasing" for the stock.
(Additional reporting by Dan Burns in New York, editing by Braden Reddall)
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