Google announced on Monday a major reorganization of its company. The major search engine will become a wholly-owned subsidiary of Alphabet Inc., a new holding company managed by CEO Larry Page, President Sergey Brin, Executive Chairman Eric Schmidt, CFO Ruth Porat and chief counsel David Drummond.
Alphabet will manage a growing number of businesses including its well-known Internet products (Google, YouTube, Chrome, Gmail, Android) as well as non-Internet products such as Life Sciences, a health-focused research and development company, Calico, a longevity research firm, as well as Nest and Google Fiber. With over 180 companies acquired by the search engine company since 2010, it is time for the company to structure its activities in a “cleaner and more accountable” way. In addition to its acquisitions, Google has two investment arms – Google Ventures and Google Capital.
“Our company is operating well today, but we think we can make it cleaner and more accountable. So we are creating a new company, called Alphabet (http://abc.xyz). I am really excited to be running Alphabet as CEO with help from my capable partner, Sergey, as President,” said Larry Page in the official blog post.
Sundar Pichai, Google’s product chief from October 2014 was announced as the next CEO of Google. With a ‘slimmed-down’ version of Google, Pichai will manage the largest subsidiary of a new parent company. “I feel very fortunate to have someone as talented as he is to run the slightly slimmed down Google and this frees up time for me to continue to scale our aspirations.” This will include search, advertising, maps, YouTube, Android and the data centres and networks.
What Google’s Alphabet Means for Investors
“Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights,” said Larry Page. Google shares will be traded under its existing stock tickers GOOG and GOOGL. According to the WSJ article, Google will report “separate financial results for the core Google business and the remaining Alphabet businesses”. Google shares spiked 6% after the announcement which clearly shows that investors feel positive about the move.
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