[New post] Google morphs into Alphabet

http://www.business-standard.com/article/reuters/google-morphs-into-alphabet-investors-cheer-clarity-115081100066_1.html

Google Inc announced a surprise overhaul of its operating structure on Monday, creating a holding company called Alphabet to pool its many subsidiaries and separate the core web advertising business from newer ventures like driverless cars.

The move appeared to be an attempt by the search engine giant to focus on its more creative and ambitious projects, while investors cheered the potential for more financial disclosures of its disparate business segments.

"It suggests that in all likelihood, Google is not going to slow the pace of their experimental processes like self-driving cars," said Michael Yoshikami, head of Destination Wealth Management, which has $1.5 billion under management.

The surprise news sent shares of Google up as much as 7 percent to $708 in after hours trading.

The new structure could also give Wall Street better insight into Google's investment in moonshot projects like Google X, a secretive lab that produced the unpopular Google Glass wearable device.

"They are aware that they've got this hodgepodge of companies," said Roger Kay, an analyst at Endpoint Technologies Associates. "Maybe it's better to sort them out a bit and make it clearer which ones are bringing in the bacon and which ones are science projects and which ones are long-term bets."

The Mountain View-based company co-founded by Larry Page and Sergey Brin in 1998 has grown from an Internet search engine to a far-reaching conglomerate that employs more than 40,000 people worldwide.

Google's planned structure resembles the way companies like Berkshire Hathaway and General Electric are organised, with a central unit handling corporate-wide activities such as finance and relatively independent business units focused on specific areas.

Under the new corporate structure, the Google unit will encompass the core search engine as well Google Maps and YouTube.

In addition to Google X, the company's new ventures such as Calico, which focuses on longevity, and connected home products maker Nest will be managed separately. Other units that are part of the new structure include Fibre, for its high-speed Internet efforts, venture capital arm Google Ventures, and Google Capital, which invests in larger tech companies.

Alphabet Inc will replace Google as the publicly traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all the same rights.

"This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google," Page, the current CEO of Google, said in a blogpost. Page will become CEO of Alphabet.

Analysts said the new structure could herald a new era of fiscal discipline and transparency in some of Google's more experimental and opaque business units.

In a filing with the Securities and Exchange Commission, Google said the new arrangement will take effect later this year and that it will likely result in two reportable, financial segments.

"For example, if a unit is doing well or badly they can dial it up or down, they can form partnerships or different companies," said Kay of Endpoint Technologies.

Some other analysts were cautious, saying the new holding company would need to provide more details on cash flow of the experimental business segments.

http://googleblog.blogspot.com.au/2015/08/google-alphabet.html

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.

What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity). Fundamentally, we believe this allows us more management scale, as we can run things independently that aren't very related. Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We'll also make sure we have a great CEO for each business, and we'll determine their compensation. In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.

This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google. A key part of this is Sundar Pichai. Sundar has been saying the things I would have said (and sometimes better!) for quite some time now, and I've been tremendously enjoying our work together. He has really stepped up since October of last year, when he took on product and engineering responsibility for our Internet businesses. Sergey and I have been super excited about his progress and dedication to the company. And it is clear to us and our board that it is time for Sundar to be CEO of Google. 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. I have been spending quite a bit of time with Sundar, helping him and the company in any way I can, and I will of course continue to do that. Google itself is also making all sorts of new products, and I know Sundar will always be focused on innovation -- continuing to stretch boundaries. I know he deeply cares that we can continue to make big strides on our core mission to organize the world's information. Recent launches like Google Photos and Google Now using machine learning are amazing progress. Google also has some services that are run with their own identity, like YouTube. Susan is doing a great job as CEO, running a strong brand and driving incredible growth.

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alphabet now?

"Google's planned structure resembles the way companies like Berkshire Hathaway and General Electric are organised, with a central unit handling corporate-wide activities such as finance and relatively independent business units focused on specific areas."

and wait for the ".xyz" url to pushed and become a fad..

"This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google."

401