There are two kinds of CEOs: innovators -- who come up with growth ideas -- and janitors -- who cut costs and instill discipline. There are times when it's best to invest in an innovator, and others when a janitor generates superior shareholder returns. What does this mean for stocks? Potential buys include Boeing Co. (NYSE: BA), Google, Inc. (NASDAQ: GOOG), and American International Group, Inc. (NYSE: AIG), and potential holds include Hewlett-Packard Co. (NASDAQ: HPQ), Microsoft Corp. (NASDAQ: MSFT), and Apple, Inc. (NASDAQ: AAPL).

This thought came to mind after reading an excerpt from the Wall Street Journal's Alan Murray's new book -- Revolt in the Boardroom: The New Rules of Power in Corporate America. It's a measure of his clout that he got the front page [subscription required] -- albeit of the Saturday edition. Murray's argument is that "boring" CEOs are now on the rise "in the wake of ... Enron" (a hackneyed expression that should be banned from the journalistic lexicon).

Following journalistic convention, Murray extrapolates a trend from three cases. He argues that boards have appointed "boring" CEOs -- I call them janitors since they are the executive equivalent of a clean up crew that comes in after a rock concert -- to avoid their predecessors' scandals. He cites the "boring" examples of Jim McNerney at Boeing, Martin Sullivan at AIG, and Mark Hurd at HP. They can boost the stock price for a while by cutting excess cost and instilling process discipline.

But they often fall down when it comes to generating revenue growth ideas. This is where investors can benefit from an innovator CEO -- the archetype of which is Apple's Steve Jobs. For investors there are two problems with such innovators:

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Yahoo! Inc. (NASDAQ: YHOO) was the shining star of the internet bubble in 2000, just before the dot-com crash, and has managed to keep a huge customer base (tens of millions, if not hundreds of millions based on how you calculate it). Yahoo! customers are loyal apparently, even though Google has trounced Yahoo! in recent years in terms of search popularity and overall brand awareness. Like Google Inc. (NASDAQ: GOOG), Yahoo! was founded by Stanford grad students, Jerry Yang and David Filo, so that information on the web could be more easily found back when the web was in its infancy -- 1995.

From 1995 to 2001, Yahoo! grew at a rapid clip, and then saw a downward spiral as advertising fortunes started collapsing at the same time Google's "text ad" advertising model started growing by leaps and bounds. It's pretty obvious by now that Yahoo!'s "one ad for all" approach grew quite stale (and so did its revenues) at the same time Google's "customer relevant" and unobtrusive ad model grew an an inversely proportionate rate. Yahoo! has made great strides on the comeback trail under five-year CEO and Hollywood expert Terry Semel, who has modeled Yahoo! as a "relationship builder" to customers (and gotten them to pay for certain services).

This model is quite opposed to Google's "tool-based" customer model that can't touch Yahoo!'s model for creating and enhancing actual relationships with paying customers, beyond just providing easy internet tools for customers while keeping that "relationship" quite distant. Yahoo! shares spit almost three years ago, but have remained between $29 and $44 per share since that time. By contrast, Google's shares have skyrocketed from $85 in August 2004 to over $460 today. In terms of an investment over the past five years, it's hard to draw a conclusion since Google has been publicly traded for less than three years, while Yahoo! has been traded for quite a bit longer than that.

Back in the roaring 1990s, the state of California had little trouble with its budget. Basically, with the dot-com bull market, the state was reaping huge amounts of revenues from tax-paying tech millionaires who were exercising their stock options.

Well, according to a story in the AP, it looks like history is repeating itself (kind of). In this case, it is mostly Google Inc. (NASDAQ:GOOG) that is providing the windfall.

In fact, 16 Google executives will account for $380 million in taxes for 2006 for California, of which about half comes from the co-founders Sergey Brin and Larry Page.

There will also be a boost from other comeback tech companies, such as Oracle Corp. (NASDAQ:ORCL), Hewlett-Packard (NYSE:HPQ), and Cisco Systems Inc. (NASDAQ:CSCO).

Yet, by far, Google will have the biggest impact. Actually, it has even offset the impact of the slowing real estate market.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

As expected, the overnight jump in Google shares based on the Q3 results the Internet company had after the bell Tuesday was nothing short of a home run -- literally. GOOG shares closed at around $426 on Thursday evening, and then 30 minutes later Google announced its latest quarterly results, and again the company easily passed consensus expectations for revenue and profit.

Can anything stop Google? It seems like nothing can these days. Friday morning, GOOG shares opened to the tune of nearly $456 per share, quite a nice overnight jump. For the week, GOOG shares closed at $459.67, an impressive jump of $33.61 or 7.89% from Thursday's close.

With Google gaining almost 8% overnight, the estimates from many analysts started their bull run again, with Jim Cramer bumping his estimate from $500 to $560 per share along with Citigroup going for the jugular and a $600 price target. Will Google get there?

It seems that Google can do no wrong as it constantly blows past quarterly estimates again and again, while competitor Yahoo!'s shares are in the doghouse. And although Yahoo! remains the #1 overall visited web property, Google is catching up fast. Adding Youtube to the mix may mean Google will be the largest diversified Internet company in terms of eyeballs very soon. Now, if it can start making money with all those eyeballs beyond search advertising, the sky won't even be the limit. Stay tuned for more quarters and we'll all see.

Here are a few blogging highlights for Google from this past week:

Google blows past Q3 earnings expectations, a I liveblog the event

Is Google neglecting some of its web properties these days?

UTube.com traffic spikes when Google-Youtube announcement hits hype fever pitch

Google goes solar at corporate HQ in a lesson on how to go green big-time

Big media chomping at the bit to go after Google now that it's acquired Youtube

A garage? Has Google Inc. (NASDAQ:GOOG) finally lost it?

Not really. You see, when Larry Page and Sergey Brin built Google, they rented out a garage (the company was incorporated on September 7, 1998). It was about 1,900 square feet – and, of course, ultimately turned into a $125 billion empire.

It's something that happens with some frequency in Silicon Valley. For example, in 1939, Bill Hewlett and Dave Packard started their legendary company from a modest garage (Hewlett-Packard Company, NYSE:HPQ, now owns it).

As for the Google garage, it is based in Menlo Park and will now become a Silicon Valley landmark of sorts. Oh, there is even a hot tub on the property. But, apparently, the co-founders did work tirelessly on their search engine.

On the Google corporate site, you can get some info on the early history.

The office offered several big advantages, including a washer and dryer and a hot tub. It also provided a parking space for the first employee hired by the new company: Craig Silverstein, now Google's director of technology.

Already Google.com, still in beta, was answering 10,000 search queries each day.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

After having followed this rather bizarre story for a few months now, it seems that Google co-founders Larry Page and Sergey Brin have settled with an aircraft restorer that was hired by the pair. The Google co-founders hired renowned Oklahoma aircraft desginer and restorer Les Jennings to customize a Boeing 767 that the pair bought for personal use.

The requests from the pair delved into the odd and mysterious (and expensive), from hammocks swinging from the ceiling to presidential-quality state rooms and dining rooms for the pair and Google CEO Eric Schmidt.

Both Page and Brin accused Jennings of leaking secret details about the Boeing plane to the press, in breach of a court-ordered confidentiality clause, and they took Jennings to court over this. As of today this suit has been dropped by Brin and Page, although the original breach of contract suit will still press forward.

The original suit accused Jennings of not completing requests on time as per the contracted schedule. Apparently this will all press on now as planned, even though the charges against Jennings for actually talking about the plane publicly have now been dismissed.

Brian White has worked in various executive positions in technology and telecommunications and now focuses on editing and writing.

From last week's feeding frenzy over results from the Internet and computer behemoths -- Google, Yahoo! and Microsoft -- let's focus in on the difference between the two most direct competitors from that bunch (whether the companies admit it or not): Google and Yahoo! Yahoo's earnings were, by all accounts, excellent.

I love it when the quarter is described only as "meeting analyst expectations," who cares? A company's results should be determined by more fundamental measures such as competitive gains, profit gains, growth (realistic), and EPS: not by "analyst expectations." But, I digress.

Yahoo! profit dipped from last year, mostly because the company sold quite a few Google shares in the year-ago period to make the quarter shine. Revenue increased 26% to land at $1.58 billion. Result: YHOO shares fell nearly 18% right after the announcement. Oh my -- as always, the market lost its head (not sure if it has one).

Google results were stellar and blew away "analyst estimates" by every measure -- $721 million in profit on sales of $2.46 billion. With a $2.33 EPS figure and a 77% revenue increase, Google's second quarter just upped the bar once again for the search giant. Result: GOOG shares fell almost all day before the earnings were released and slowly gained in after-hours trading. I still feel that Google shares are overvalued, but the company does continue to have incredibly impressive quarters. Will Google's sky slowly fall one of these quarters? Hard to say, but if it continues to give customers what they want and serve ads that work for the customer, Google's sky may just remain blue for a long while.

Google is set to announce that it will open an office in Ann Arbor, MI which will employ 1,000 people over the next five years. While this may be a bit of an ego project for Google co-founder Larry Page, it reflects Google's deeply held desire to get a lot for a little. And its impact on the Michigan governor's race could be enormous.

It must be very gratifying for co-founder Larry Page to make such a powerful statement of his company's success a mere 11 years after graduating from the local university. Page was born in East Lansing, MI and graduated from Ann Arbor-based University of Michigan with an engineering degree in 1995.

But it doesn't take a math genius to figure out that Michigan is hemorrhaging jobs. According to the Detroit Free Press, "The declining fortunes of General Motors Corporation (NYSE: GM) and Ford Motor Company (NYSE: F), along with the related bankruptcy filings of major automotive suppliers Delphi Corp., Collins & Aikman and Tower Automotive have hammered Michigan's economy."

 

Google founders Larry Page and Sergey Brin were hoping to be throwing some massive mile-high parties by now. Instead their party plane is weighed down by lawsuits.

According to a story in today's Wall Street Journal, Page and Brin's private jet is the subject of multiple lawsuits over its renovations -- originally budgeted to take ten months and cost $10 million. Page and Brin bought the used Boeing 767 widebody, designed to carry 180 passengers, as a private jet last year and promised to use it to take lots of their friends to places like Africa.

Hey, I might like to do things like that if I was a billionaire. Don't worry, shareholders. The tab for the jet is not on Google's books. This is a private plane, technically owned by a holding company called Blue City Holdings, LLC.

The plans for the plane reportedly were to include a "lounge" for Google Chief Exec Eric Schmidt, two "state rooms" for Brin and Page, a dining room, and additional seating for passengers (near the back, of course). Apparently designer Leslie Jennings had to accommodate strange requests from Brin and Page, including having hammocks installed hanging from the plane's ceiling. I'm imagining a tropical feeling at 35,000 feet right now, maybe.

Page and Brin had reportedly had a few spats over the size of the beds in their bedrooms. Schmidt reportedly had to step in and say, "Sergey, you can have whatever bed you want in your room; Larry, you can have whatever kind of bed you want in your bedroom."

 

The question begs regarding the enigmatic power structure behind Google: just who runs the place? Common wisdom says that it's Eric Schmidt, the former Novell and Sun Micro executive who founders Larry Page and Sergey Brin brought in to run the company some years ago. But, Google is an uncommon company and conventional wisdom sometimes takes a backseat to what comes out of the Google machine.

It's a very good thing for Google the company to have a very recognizable CEO as the frontman-face of the company. But, many bets are that Google is still "run" (read: evangelized) by founders Page and Brin, and sure: there needs to be fiscal discipline in place and standard corporate structure to keep Google from imploding on itself as its scale and growth continue to blast away. But, again -- who really runs Google? My bet is on the employees (down-up management, if you will) more than any leader dictating what Google does (up-down management). Is this a good thing for investors? A-b-s-o-l-u-t-e-l-y.

In the annual Google shareholder's meeting last week, Sergey Brin -- co-founder of the company -- responded in a very neat and tidy way to an investor's questioning whether Google stock would soon split so that the shares could become more affordable to the everyday investor. I, for one, loved his response, although I was not surprised -- Googlefolk are generally straight-up and speak their minds about such things.

Brin's response was that Google had no plans to split the common stock -- or do away with the dual-class stock structure -- since it was in the investor's best interest to heavily research GOOG stock and then make a decision on whether to support and help own the company by buying shares. This response, which is needed more often than not in the market, is a good reminder that we all need to do our due diligence before buying stock, something that the everyday investor often fails to do.

Here was Brin's response: "We'd rather not have that shareholder who says on a whim, '$20 bucks a share seems cheap, I think I'll buy it,' " -- and then he emphasized the research one should do before owning any piece of any public company. Kudos, and excellent advice. A low share price may mean an average individual investor can purchase more shares, but in no way reflects that the stock is actually inexpensive.

Last week Microsoft's Bill Gates expressed regret about being the world's richest man. When I read this, I was reminded of the expression, "be careful what you wish for, you might get it."

Before launching into an analysis of how Gates could be toppled from his throne, it's worth noting that I've admired Microsoft and wondered whether it's lost its elbow room. I praised Microsoft's ability to adapt to change in two of my books, The Technology Leaders and Value Leadership. But in the last several years, Microsoft seems to have lost its mojo as I noted in these interviews by Red Herring and The Washington Post.

Here's a surprise. The biggest threat to Gates's top rank on the Forbes 400 comes not from the number two on the list, but from numbers 15 and 16. According to that September 2005 list, Gates's net worth totaled $51 billion. Berkshire Hathaway's Warren Buffett came in second at $49 billion. And he was followed by Microsoft co-founder Paul Allen ($22.5B), Dell's Michael Dell ($18B) and Oracle's Larry Ellison ($17B). Spots six through 12 were occupied by descendants of Wal-Mart founder Sam Walton, Microsoft CEO, Steve Ballmer, and heiresses from Cox Enterprises and Fidelity.

Google continues to demonstrate its particular brand of goofy-yet-financially sound thinking, as the company indicated in a proxy filing yesterday. CEO Eric Schmidt and co-founders Sergey Brin and Larry Page will collect $1 in salary for 2006, just as they did for 2005. According to the filing, "Their primary compensation continues to come from returns on their ownership stakes in Google. As significant stockholders, their personal wealth is tied directly to sustained stock price appreciation and performance, which provides direct alignment with stockholder interests."

(On a multiples basis, however, they might have the highest bonuses anywhere; Brin was paid $1,723 in bonus, with Schmidt and Page collecting a tidy $1,630, over 1600 times their annual salaries!)

Google also announced that the company intends to forgo dividends to its shareholders "in the foreseeable future."