Google Inc shares shed earlier gains as confidence that CEO Larry Page would rejuvenate the No. 1 Internet search company wavered.
Shares of Google, which gained 2 percent following Thursday's better-than-expected quarterly results and the news that Page would replace Eric Schmidt as chief executive, were down $1.08 at $625.69 in midday trading on Friday.
What's going to change under Larry? said BGC Partners analyst Colin Gillis, asking the question on the minds of executives from the tech capital of Silicon Valley to media-centric New York.
In our opinion, Larry is likely to increase investments as a priority, Gillis said. It could be a long-term positive, but short term it's a negative.
Starting April, Google's Page will take over as chief executive, a move the company hopes will streamline its decision-making process amid fresh competition from Facebook and Twitter.
Within technology circles, the move by Google -- born during the first dot-com boom -- to replace CEO Eric Schmidt with the 38-year-old Page left some wondering how the search giant would deal with middle age.
Founder becoming CEO ... Is this like a Steve Jobs returning or a Jerry Yang returning? Chris Dixon, a technology veteran who has invested in Skype and Foursquare, tweeted.
Steve Jobs returned to Apple Inc in the 1990s to save the company he founded from near death. Yahoo Inc's Jerry Yang made a similar return, coming back to his Internet company during a troubled stretch -- but has failed to restore its fortunes.
It is important to note that although the titles have changed, the core team remains the same ... this new team structure makes a lot of sense and could result in faster decision making, JP Morgan analysts led by Imran Khan said.
Some analysts believe that Google's stock could gain another 20 percent from current levels.
Brokerage UBS said it was bullish on Google's long-term prospects and expects the company's focus on its emerging display network business, YouTube, Android and enterprise customers to deliver healthy returns in 2011.
Fourth-quarter operating margins were slightly weaker than expected at 53 percent on higher sales and marketing expenses.
JP Morgan's Khan, who lowered his 2011 operating margin estimates by less than a percentage point to 52.4 percent, said the expenses are necessary to promote future growth.
Evercore Partners, however, said it was still concerned about Facebook's present growth trajectory and deepening integration with third party sites.
Investors have speculated that Facebook could cut into Google's business if advertisers shift to the social network.
Shares of the Mountain View, California-based Google closed at $626.77 on Thursday on Nasdaq. They have risen 16 percent since Google reported third-quarter results mid-October and are up almost 45 percent from its 52-week low of $433.63 touched in July 2010.
(Reporting by Paul Thomasch in New York, Alexei Oreskovic in San Francisco and Sayantani Ghosh and Mary Meyase in Bangalore; Editing by Joyjeet Das; Editing by Phil Berlowitz)