Google to be part of new holding company, 'Alphabet'
Google Inc.’s stock (GOOGL) surged 6.1% in premarket trade Tuesday, as analysts cheered the Internet giant’s move to create an umbrella company named Alphabet Inc. Evan Wilson of Pacific Crest said that investors are clamoring for more disclosure about Google’s core business and will likely see that the core business is healthy once the reorganization occurs. Google co-founder Larry Page will step down as Google’s chief and Pichai was appointed as head of a “slimmed-down” version of the company. “I would challenge you to find anyone at Google who doesn’t like Sundar or who thinks Sundar is a jerk”, Caesar Sengupta, a vice-president who has worked with Pichai for eight years, told Bloomberg last year. Sergey Brin will be the president and Eric Schmidt will become executive chairman. Pichai quickly began to receive more responsibility, however, taking on involvement with various Google search products including Firefox, Google Toolbar, Desktop Search, Gadgets, and Google Gears and Gadgets. The surprise news sent shares of Google up as much as 7 percent to $708 in after hours trading. “They are aware that they’ve got this hodgepodge of companies”, said Roger Kay, an analyst at Endpoint Technologies Associates. But the gambles that make Google what it is have also made Wall Street nervous. Larry and Sergey will spend their time managing the larger Alphabet company, which seems what they were doing before anyway. “Alphabet is about businesses prospering through strong leaders and independence”. Google: It consists of the search engine, Google Adsense, Google Map, Apps Store, Youtube, Android, other tech infra. 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. Alphabet is now the parent company of all of those smaller companies, one of which is Google. All Google shares will be automatically converted into the same number of Alphabet shares, with all of the same rights. Analysts also said the new structure could herald a new era of fiscal discipline and transparency in some of its more experimental and opaque business units. But he noted that companies with multiple reporting segments usually did not break out such detail. “It’s better than not doing it but on the other hand, you’re going to have a ton of businesses buried inside of a legacy Google”, said Brian Wieser, an analyst for Pivotal Research Group.
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