Author: Samantha Sharf Source: Forbes
The company is forming a new umbrella structure where the parent company, Alphabet, will house distinct segments. The products you use everyday like search, maps, YouTube and the Android operating system will retain the Google name. A separate bucket will house Google’s more far-flung experiments and acquisitions. Think aging research division Calico or smart home acquisition Nest. The reorganization will give each business more autonomy and change the way the company reports its financials. The new structure is kind of like the tech version of Warren Buffett’s Berkshire Hathaway , which has a host of operating segments alongside its insurance operations and investment portfolio.
Who’s going to be in charge?
Here is what we know so far — Google’s billionaire co-founders Larry Page and Sergey Brin will run Alphabet, with Page as CEO and Brin as President. Executive Chairman Eric Schmidt will keep that role at the parent company. Sundar Pichai, senior vice president of product, will be CEO of the Google segment. Finance chief Ruth Porat will stay in that role at both operations.
Each company under Alphabet will have its own CEO. This will likely just mean title upgrades for the folks currently running projects but could be a chance for the company to scoop up outside talent.
What does this mean for investors?
More transparency into Google’s operations would be welcomed on Wall Street, where investors have clamored for a better understanding of how the company makes and spends its money. The concern has been that Brin and Page use the mountains of cash earned from Google’s core advertising-supported businesses to fund projects that may never pay off. Starting in the fourth quarter the company will report results specific to the core business for the first time.
It is not yet clear how much detail will be included about Google or other business lines but investors cheered the move initially as the stock climbed above $700 in response.
On a practical level not much will change for shareholders. Once the restructuring is complete Google shares will automatically convert to Alphabet shares and shareholders will retain all the same rights. The company will continue to trade under the tickers GOOGL, for Class A shares that carry voting rights, and GOOG for Class C shares with no voting rights.
What does this mean for users?