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Google Management Surprise: Longtime Sales Chief Nikesh Arora Leaves For SoftBank

This article is more than 9 years old.

On a day when Google announced second-quarter earnings that bested expectations on sales but fell short on profits, the company dropped a management bombshell: Longtime Chief Business Officer Nikesh Arora is leaving after almost a decade to join Japan's SoftBank as CEO of its Internet and Media operation and vice chairman of the overall company.

Replacing him "for now," the search giant said, will be Omid Kordestani, who has been a senior adviser to the office of the CEO and founders. Kordestani, who led Google's sales teams starting way back in 1999 when Google scarcely had a business, was described by Google as "our business founder."

This is a big change and one that clearly won't be the last, since Kordestani's job is apparently not permanent. Arora has been Google's top sales executive, one who has been instrumental in helping open up new advertising markets beyond its iconic search ads. Under his leadership, Google has made big inroads into display ads and has been driving an ongoing push to get more brand advertisers to look beyond television and print magazines to run more ads on Google's YouTube video site as well as its network of a million other websites to which it syndicates display ads.

Perhaps not coincidentally, Arora just married a Delhi businesswoman, Ayesha Thapar, CEO of Indian City Properties, the real estate arm of Thapar Group. They will split time between India and Silicon Valley.

Arora ran Google's European operations from 2004 to 2007, then added the Middle East and Africa into his purview. Five years ago, he took over global sales, becoming senior vice president and chief business officer in 2011. He reportedly was Google's highest-paid executive. He even will get to keep an $8 million retention bonus granted in 2012, which had a payback requirement that Google has waived.

At least one ad partner doesn't seem too worried about Arora's departure. Craig Elimeliah, senior VP and director of creative technology at the ad agency RAPP, said in an interview that he wasn't surprised because Arora had been at Google since its 2004 IPO and took a pretty prominent job at SoftBank. He assumes Google will fill the position more permanently from within, though perhaps with someone with more direct experience in mobile, a key area of challenge for the company. "Google definitely has a very deep bench," he says. "They never skip a beat."

Apparently investors aren't too worried either--about Arora's departure or the profit shortfall--because shares are up 1.6% 1% in after-hours trading, after falling with the overall market by 1.5% today, to $573.73. Google's net revenues after subtracting costs of getting traffic from partners rose 22% to $12.7 billion, about $400 million more than analysts expected. Profit per share before certain expenses such as stock compensation was $6.06, noticeably under the $6.25 analysts expected.

OK, so maybe not quite a bombshell, but a surprise nonetheless.

Here's what CEO Larry Page posted on his Google+ page:

After almost ten years, +Nikesh Arora  our Chief Business Officer, has decided to leave Google to join one of our partners, SoftBank, as Vice Chairman of SoftBank Corp. and CEO of SoftBank Internet and Media.   I remember first meeting him at the British Museum, which for some reason Sergey had decided would be a good interview location. Nikesh has been a tremendous leader, adviser and mentor to many Googlers -- including me.  We have learned a lot together, and had a lot of fun along the way.  

+Omid Kordestani, who was our business founder and led our sales teams for many years, will be stepping in to lead our business organization for now.  When we hired Omid we had no business people so we had all the engineers interview him around a ping pong table.  I think he survived because he is actually an engineer!  Omid has always been one of my closest advisors, especially since I became CEO again in 2011.  He personifies the entrepreneurial spirit that is so important to Google.  There is nothing Omid doesn’t know about Google, our customers and partners, and I know that under his leadership the team will excel.

Here are a few ad-oriented highlights during the call, which featured Arora and Chief Financial Officer Patrick Pichette:

Product ads: Pichette said Google's Product Listing Ads continue to get more interest from advertisers, driving three times as much traffic as a year ago.

Brand ads: Arora said some 300 meetings with brand advertisers indicated more and more interest--particularly in video ads on YouTube, including Google Preferred, a network of top-quality video producers.

Mobile ads: Yes, they still don't command prices as high as on the desktop, but Google repeated its longtime contention that eventually they should prove even more valuable.

Arora's departure: Wondering why beyond the obvious opportunity at SoftBank Arora is leaving? Sorry, you won't find out on this call, nor on who might replace him after Kordestani, since Pichette requested questions be focused only on results.

Apps and ads: On a question about how Google might make money from indexing apps as it does webpages, Pichette said it's still early in Google's attempt to make sure it's relevant in the age of apps. Once it can provide lots of so-called deep links into apps, he said, there will be "enormous business opportunities," but apparently not in the short term.