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Google to reorganize into new company called Alphabet Google to reorganize into new company called Alphabet
(35 minutes later)
Google is dead. Long live Alphabet. The tech company announced on Monday that it would rebrand itself Alphabet – a new holding company whose largest wholly owned subsidiary will be Google.Google is dead. Long live Alphabet. The tech company announced on Monday that it would rebrand itself Alphabet – a new holding company whose largest wholly owned subsidiary will be Google.
In a blogpost made public after the stock markets closed Larry Page, Google’s co-founder, wrote: “As Sergey [Brin, co-founder] and I wrote in the original founders letter 11 years ago, ‘Google is not a conventional company. We do not intend to become one.’ As part of that, we also said that you could expect us to make ‘smaller bets in areas that might seem very speculative or even strange when compared to our current businesses’. From the start, we’ve always strived to do more, and to do important and meaningful things with the resources we have.” In a surprise blogpost made public after stock markets closed, Larry Page, Google’s co-founder, said Alphabet would preside over a collection of companies, the largest of which will be Google. The site’s address also eshewed convention, https://abc.xyz/
All shares of Google will automatically convert into shares of Alphabet, which will continue to trade under the stock ticker symbols GOOG and GOOGL. Shares in Google soared 5% in after hours trading. “As Sergey [Brin, co-founder] and I wrote in the original founders letter 11 years ago, ‘Google is not a conventional company. We do not intend to become one’,” wrote Page.
Brin will serve as Alphabet’s president. “The newer Google is slimmed down a bit,” wrote Page, “with the companies that are pretty far afield of our main Internet products contained in Alphabet instead.” “As part of that, we also said that you could expect us to make ‘smaller bets in areas that might seem very speculative or even strange when compared to our current businesses’. From the start, we’ve always strived to do more, and to do important and meaningful things with the resources we have.”
The tech company has come under pressure as its founders have used the enormous success of its search engine to fuel riskier bets on autonomous cars, smart household devices, internet delivering balloons and cutting edge medical research. The move will give investors greater insight into how the money is being spent.
All shares of Google will automatically convert into shares of Alphabet, which will continue to trade under the stock ticker symbols GOOG and GOOGL. Shares in Google soared 5% in after hours trading. The new structure is said to be similar to Warren Buffett’s Berkshire Hathaway, which wholly owns a number of diverse holdings and has stakes in several others.
Page will become Alphabet’s CEO. Brin will be its president, and Eric Schmidt will be the executive chairman of Alphabet. Ruth Porat will be its CFO, and David C. Drummond will be the chief legal officer and secretary. The company’s chief business officer, Omid Kordistani, will step down and become “an advisor to Alphabet and Google” according to the company’s SEC filing.
Page, Brin, Schmidt and Drummond will leave Google, whereas Porat will keep her CFO role there and Sundar Pichai will take over as CEO.
Under the new structure investors will get a clearer picture of how much money is being spent in Google’s more high risk venture. In return Page and Brin could have more flexibility to spin off assets than Google had on its own. They could seek outside investors for some of their more risky ventures or raise money selling off more of Google.
Page characterized the company as “slimmed down”. Companies that are “pretty far afield of our main Internet products” will be contained in Alphabet, he said. Google’s health efforts like Life Sciences and Calico, a division investigating aging and other diseases, will have their own chief executives. The division will also include X lab and Wing, its drone delivery effort, as well as Nest, its “internet of things” division.
Google Fiber, the company’s broadband arm, will also become a new entity managed outside of Google proper, as will the company’s investing arms, such as Google Ventures and Google Capital.
“Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related,” said Page.
The new segments will start reporting their own financials in early 2016, though the holding company will be registered “later this year” according to the filing.
The move was greeted with amused bafflement by both techies and the market.
next CEO of google should be the human who can explain what the hell is happening
“Next CEO of google should be the human who can explain what the hell is happening,” tweeted BuzzFeed tech editor Charlie Warzel.
Others immediately indulged in speculation. “Hate saying this, but does make sense for Alphabet to buy $twtr (T is for Twitter, yeah yeah), not $goog,” tweeted Mitchell Holder.
Google, sorry, Alphabet itself was not above poking a little fun at itself: embedded in the script on the blog post was a link to the company website for Hooli, the fictional version of Google from the Mike Judge’s HBO comedy Silicon Valley, a poison-pen letter to the tech industry that has had particularly acerbic things to say about Google.