Following the release of its quarterly earnings report on Friday, Google posted a 16% jump in its stock, which translates to $65.1 billion for the company. This barely beat the previous record of $65 billion in 2000 by Cisco Systems Inc. The windfall occurred after the earnings report beat analyst estimates, which had not occurred since the end of 2013. Also prompting the run up in its stock price were promises by the company that it would be curtailing its spending on risky investments.
Google CFO, Ruth Porat, stated that Google will control its costs more diligently in the future. This came as welcome news to investors who had been dissatisfied with Google’s diversification away from its core business of internet search and advertising. Investment in other projects such as its self-driving cars and the unpopular Google glass eyewear, had begun to increase the growth rate of its operating expenses beyond that of the company’s revenue.
The change in strategy by Google follows its recent hire of Ruth Porat as CFO from Morgan Stanley. Google CEO Larry Page and co-founder Sergey Brin had resisted scaling back the company’s R&D projects until Porat came on board.
Google’s meteoric rise in stock price did not allow it to take Apple’s position as the most valued U.S. company. The two companies currently stand at market values of $469 billion for Google and $747 billion for Apple. The fortunes of Page and Brin each rose by over $4 billion following Friday’s events. Although some may be disappointed to learn that Google will be cutting back on its research into interesting projects, shareholders may be few among them. With revenue growth accelerating in light of new cost controls, some analysts foresee several more quarters of Google beating earnings estimates.