Google's Schmidt aims to cash in big with $2.5bn stake sale

Google's executive chairman Eric Schmidt is selling about 42 per cent of his stake in the company, a move that could bring a $2.51bn windfall.

Eric Schmidt will sell 3.2 million Google shares of Class A common stock through a stock trading plan. AP Photo / Peter Dejong

Google's executive chairman Eric Schmidt is selling about 42 per cent of his stake in the internet search company, a move that could net the former chief executive a US$2.51 billion (Dh9.25bn) windfall.

Mr Schmidt will sell 3.2 million shares of Class A common stock through a stock trading plan, Google said in a filing with the United States Securities and Exchange Commission on Friday.

The plan, which Google said would give Mr Schmidt "individual asset diversification and liquidity", allows him to spread trades out over a period of one year to reduce the market impact.

Shares of Google were down $4.11 at $781.26 in after-hours trading on Friday. A Google spokeswoman would not comment on why Mr Schmidt is selling the shares at this time.

James Dix, a Wedbush Securities analyst, said Mr Schmidt's stock sales did not signal a loss of confidence in the company.

"I'd be more worried if the current CEO or CFO sold a lot of their stake," said Mr Dix.

Mr Schmidt, who served as Google's chief until 2011, currently owns about 7.6 million shares of Class A and Class B common stock. The shares represent 2.3 per cent of Google's outstanding stock and about 8.2 per cent of the voting power of Google's stock.

The fact that Mr Schmidt will still own a significant amount of shares after the sales means he will have a good deal of "skin in the Google game", said Kerry Rice, a Needham & Co analyst. But he said it could hint at Mr Schmidt playing a less central role within the company.

"My speculation is that Eric's relationship with Google is evolving," said Mr Rice. "I would assume that as he decides he wants to diversify away from Google - both his career and financially - he's got ideas of what he would like to do with some of his funds."

Mr Schmidt, who helped to turn Google into the world's top search engine during his decade in charge, handed the reins to the Google co-founder Larry Page in April 2011.

As executive chairman, Mr Schmidt has been particularly involved in government relations, taking a leading role in the company's discussions with antitrust regulators in the United States and the European Union.

The US federal trade commission ended its investigation into Google last month without any action. Google has offered to change some of its business practices to appease European competition regulators.

Mr Schmidt has also made headlines apart from Google. Last month, he travelled to North Korea for a "personal" trip, which was criticised by the US state department as ill-timed - coming weeks after North Korea conducted a rocket launch in violation of United Nations Security Council sanctions.

Shares of Google are trading at all-time highs, finishing Friday's regular session at a record closing price of $785.37. At that price, Mr Schmidt's share sales would be worth $2.51bn. Google said that he had entered into the stock trading plan in November.

Mr Schmidt was ranked 138 on the Forbes list of global billionaires, with a net worth of $6.9bn last March.

Given his changed role at the company and the amount of his wealth tied up in Google's stock, it was not unreasonable for him to diversify his holdings, said Mr Dix.

"As good as Google stock is, it isn't as good as cash if you actually want to buy something," he said.

* Reuters