Google Slumps After Founders Issue Non-Voting Shares

NEW YORK ( TheStreet) -- Google ( GOOGL) co-founders Larry Page and Sergey Brin must have been scared of losing control of what has become one of the Internet's most powerful companies to split the company's stock the way they did. At first glance, the split Thursday of Google's Class A stock, which had gone under the ticker ( GOOG) since its initial public offering over a decade ago, looks like a traditional 2-for-1 split, meaning that the share price for the stock was roughly cut in half. This pushed the Class A stock which had been trading around $1,100 a share to the mid-$500 range.

But look closer. The devil is in the details.

Page and Brin also created a new category of nonvoting Class C stock. This new Class C stock inherited the popular GOOG ticker, while the Class A will now go by GOOGL. A third class of shares, the non-trading Class B stock with extra voting powers, is the private domain of Google CEO Page and Brin, the executive behind Google's experimental projects.

The new C class comes with a risk to the company. If there is a spread between the trading prices of Google's Class A and Class C share prices in the first year of trading, Google will have to pay to make up the difference -- a gamble of an estimated $300 million to $7.5 billion.

So, why would Page and Brin, who have insisted previously that they had little interest in splitting Google stock, take on such a risk? Control.

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