Eric Schmidt is stepping down as CEO of Google and cofounder Larry Page is taking over, the company just announced in its earnings release.

Schmidt will become Executive Chairman, focused on "deals, partnerships, customers and broader business relationships, government outreach and technology thought leadership."

Google's other cofounder, Sergey Brin, will take a more active role in strategic projects including product. He is giving up his role as president.

The change is effective starting April 4, 2011.

Schmidt explained the move in a blog post saying, "We have also agreed to clarify our individual roles so there’s clear responsibility and accountability at the top of the company."

He added, "managing the business has become more complicated," and Google wanted to "speed up decision making," so Page got the nod.

As for Page's ability to lead the company, Schmidt says, "Larry, in my clear opinion, is ready to lead."

This news came out of nowhere, as reflected in the stock's movement after-hours. It spiked on strong earnings, then fell back, and is now up around 1%. Investors, along with the rest of the tech world, are trying to make sense of the news.

Our snap reaction: This is not a loss for Google. Increasingly, it has seemed like Schmidt was just an ambassador for Google, speaking with media and at conferences. Our read of the company is that Brin and Page have been driving most of the major strategic decisions for a while.

With Page and Brin taking a more active role running Google, we think the company is in as strong a shape as ever.

Our snap speculation: Eric Schmidt was tossed from the company, because Sergey and Larry were frustrated with dealing with him. Note the quote from Schmidt that Google wanted to "speed up decision making."

If things are working smoothly, you don't have those problems.