Google creates new parent company

Move to place businesses under new firm Alphabet to allow reporting of results of diversified operations separately.

Google reported more than $14bn in profit on $66bn in sales last year, most of it from internet advertising [Reuters]
Google reported more than $14bn in profit on $66bn in sales last year, most of it from internet advertising [Reuters]

Google, the US technology company, is reorganising under a new moniker – Alphabet – in a move underscoring its founders’ ambitions to pursue ventures far beyond the company’s internet search core, from self-driving cars to cutting-edge medical research.

It will still use the Google name for its popular internet search engine, mapping service and related products.

However, Larry Page, Google’s CEO and co-founder, said on Monday the creation of the new holding company will provide more independence for divisions like Nest, which makes internet-connected home appliances, and Calico, which is researching ways to prolong human life.

Analysts said the move may also be an attempt to satisfy Wall Street’s demands for more fiscal accountability: As part of the reorganisation, Page said the company will begin reporting financial results by segments.

Google reported more than $14bn in profit on $66bn in sales last year, most of it from lucrative internet advertising, while other ventures have required large investments without showing immediate returns.

The company’s stock has surged in recent weeks after a new chief financial officer announced other moves to rein in corporate spending.

Rise of Sundar Pichai

The reorganisation cements the rise of Sundar Pichai, a longtime Google executive, who will become CEO for the core Google business.

Page will be CEO of the new holding company, with his co-founder Sergey Brin serving as president.

Google’s executive chairman, Eric Schmidt, will have the same title at Alphabet.

“Sundar has been saying the things I would have said [and sometimes better!] for quite some time now,” Page wrote in a blog post announcing the changes.

Google’s decision to create Alphabet may be an attempt to satisfy Wall Street’s demands for more fiscal accountability [EPA]

Pichai, 43, who was named overall chief of Google products last autumn, is viewed by many as a potential successor to Page.

Pichai was part of the team that launched the Chrome browser in 2008 and also worked on various search products, including Google Toolbar, Desktop Search, Gadgets and Google Gears, according to the company.

Before joining Google, Pichai worked as an engineer at manufacturer Applied Materials, followed by a stint in management consulting at McKinsey & Company.

Originally from Tamil Nadu province in southeast India, Pichai received a B Tech from the Indian Institute of Technology (IIT) Kharagpur.

He also has a Master of Science from Stanford University and a Master of Business Administration from the Wharton School of the University of Pennsylvania.

With the reorganisation, Page indicated that he wants to give more authority to CEOs of the companies that will be part of the new entity known as Alphabet.

“Our company is operating well today, but we think we can make it cleaner and more accountable,” he wrote.

“We believe this allows us more management scale, so we can run things independently that aren’t very related.”

Businesses that will operate separately under the Alphabet umbrella include Calico, which Google established to conduct health research in 2013; Nest, which Google acquired in 2014; Fiber, which is building high-speed broadband networks in several cities; and the Google X, the research lab responsible for Google’s self-driving car venture and previously developed its controversial internet headset, known as Glass.

Alphabet will also oversee Google Ventures and Google Capital, two corporate investment entities that focus on early- and growth-stage start-ups.

Google’s YouTube video division, however, will remain part of the core business under Pichai, although Page made a point of praising its chief, Susan Wojcicki, another longtime ad executive.

Source : News Agencies


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