Google morphs into Alphabet Inc, investors cheer clarity

Mon Aug 10, 2015 7:49pm EDT
 
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By Mari Saito and Julia Love

SAN FRANCISCO (Reuters) - Google Inc (GOOGL.O: Quote) announced a major shake-up of its operating structure on Monday, creating a holding company called Alphabet which will contain subsidiaries to separate its core web advertising business from newer ventures like driverless cars.

The move appeared to be an attempt to let the search engine giant 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.

"They are aware that they've got this hodgepodge of companies. 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," said Roger Kay, an analyst at Endpoint Technologies Associates.

The Mountain View-based company co-founded by Larry Page and Sergey Brin in 1998 has grown to more than 40,000 employees worldwide.

Google's planned structure resembles the way companies like Berkshire Hathaway and General Electric are organized, 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 traditionally associated with the company as well Google Maps and YouTube.   Continued...

 
Sundar Pichai, Google's senior vice president of products, speaks during a presentation at the Mobile World Congress in Barcelona March 2, 2015.   REUTERS/Albert Gea