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More than anything else, managers determine returns. They set strategy, hire key team members, oversee operations, and cash paychecks. Every move they make either enhances or destroys shareholder capital.

It pays to know who these men and women are, how they're paid, whether they, too, are owners, and how they perform versus competitors in certain key metrics. In this regular column, I'll examine all that and more with the goal of enhancing our understanding of some of the top stocks in Fooldom.

Next up: Google (Nasdaq: GOOG  ) . Is the executive team of the cloud computing king doing all it can to earn you outsized returns?

Foolish facts



CAPS stars (out of 5) ***
Total ratings 16,450
Percent bulls 84.9%
Percent bears 15.1%
Bullish pitches 2,386 out of 3,076
Highest rated peers Spark Networks, PhotoChannel Networks, Chordiant Software

Data current as of March 14.

Google is getting more competitive by the day. Not only is Android gaining ground with adoption in smartphones and tablets, but also the company is investing to beat its newest and perhaps most dangerous rival, Facebook.

Over the weekend, reports surfaced that the company's long-awaited social network would debut at the annual South by Southwest conference in Austin, Texas. The rumor was soon squelched, but no one denies that a social network called Circles is in development.

We've known for a while that social media and social search are areas of interest for Google, and for good reason. Facebook has attracted major advertisers to its platform and produced $487 million in profit last year.

We're talking about more than just banner ads here. A partnership with Time Warner (NYSE: TWX  ) will bring rentable movies to some of its brand-specific pages on the social network, beginning with 2008's The Dark Knight. You can bet Google would love nothing more than to strike similar deals through YouTube.

Either way, the good news for investors is that Google remains a young company in the important, emerging industry of delivering computing services via the cloud. We don't yet know what's possible when browsers get slicker, broadband gets more prevalent, and Web-based programming interfaces get standardized. All we know is that The Big G is positioned to profit from the shift.

"Profits continue to beat analyst expectations, and the company remains a strong growth firm, consistently acquiring smaller companies, focusing in on cloud computing technologies. Strong stock, great time to get in," Foolish investor becurran wrote yesterday.

Management overview



Cash Compensation

Shares Owned*

Eric Schmidt, chairman 10 $1,661 9,149,564
Larry Page, co-founder and CEO 13 $1,730 27,720,272
Sergey Brin, co-founder and president, technology 13 $1,661 27,126,186
Patrick Pichette, chief financial officer 3 $2,974,038 17,069

Source: Capital IQ, a division of Standard & Poor's. (Data current as of March 14.) * Includes 9,144,574 class B shares for Schmidt, 27,126,186 class B shares for Brin, and 27,605,272 class B shares for Page.

I have mixed feelings about Google's executive team. Co-founder Larry Page, while no doubt a tech visionary, has yet to prove himself as CEO of a global organization employing more than 24,000 people worldwide.

The Big G has also repriced options in 2009, a huge no-no for me as a Foolish investor but an economic reality for tech companies operating in the options-soaked economy we call Silicon Valley. The move, which was originally estimated to cost shareholders $460 million in lost equity, resulted in a $1.5 billion windfall for employees.

On the other hand, there's no doubting the passion that Schmidt, Page, and Brin have for the business. Many employees share their fervor. For years, Google has ranked among the top five best places to work by Fortune magazine. Why does this matter? Happy employees are always going to be more likely to be productive.

Management analysis versus competitors


Insider Ownership

Gross Margin



Apple (Nasdaq: AAPL  ) 0.70% 38.8% 19.1% 36.8%
Google 20.65% 64.5% 13.2% 20.7%
Microsoft (Nasdaq: MSFT  ) 4.04% 79.2% 19.3% 44.3%
Yahoo! (Nasdaq: YHOO  ) 9.39% 58.5% 3.5% 9.8%

Source: Capital IQ, a division of Standard & Poor's. (Data current as of March 14.)
* Return on assets
** Return on equity

Interestingly, happiness doesn't translate into outperformance when compared to Google's two highest-profile competitors: Apple and Microsoft, both of which boast higher returns on assets and equity.

And yet I like Google at these levels. At 17 times projected earnings, the stock trades for less than the long-term earnings growth rate analysts expect. That's a good sign; analysts tend to be too conservative in estimating The Big G's profit potential. My advice is to buy this Core Stock if you don't yet own it.

Do you agree? Disagree? Let us know what you think about Google's strategy, management, and competitive positioning using the comments box below. You can also rate Google in Motley Fool CAPS.

Finally, don't forget to keep tabs on Google by adding the stock to the My Watchlist tool, our free, personalized stock tracking service.

Google and Microsoft are Motley Fool Inside Value picks. Google is a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor selection. Yahoo! is a Motley Fool Global Gains pick. Motley Fool Options has recommended members open a bull call spread position in Apple and a diagonal call position in Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Apple, Google, and Microsoft and has written Apple puts. The Fool is also on Twitter as @TheMotleyFool and its disclosure policy is managing just fine, thanks.

Read/Post Comments (1) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 16, 2011, at 8:22 AM, fas550 wrote:

    This is the first time I have written a comment on a financial article but I felt compelled.

    Google makes most of it's money and profit from Adsense. Yes they make some from cloud, applications and services for government but Adsense is the engine. Other items/projects in their portfolio are funded from this. Basically they are trying different things and seeing what sticks; nothing wrong with that as this is innovation. However to put serious revenue/profit numbers behind these other products is a red herring so to speak. One of these is Android. Without getting into a heated discussion about potential, how much revenue/profit is Android actually making? From a business model Android is more akin to RedHat and I just don't see the comparison to Apple at all. The iPhone and iPad are hardware. Android is software. As far as I know Apple does not sell IOS as a stand alone product.

    In conclusion Adsense is successful Why? because no one has come close to replicating it or coming out with something better. Sounds very familiar to the iPhone and iPad. Everyone wants and iPhone and iPad. I don't hear anyone screaming for an Andriod. Much like in advertising everyone want to be the top of a Google search.

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