Google announces plans for new operating structure

Google Inc. on Monday said it will create a new company called Alphabet, with Sundar Pichai becoming CEO of Google and Larry Page running the new company. The Google logo is seen at the Google headquarters in Brussels, March 23, 2010.

In a letter to investors today, Page has revealed himself as the CEO of a new company called Alphabet.

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 auto venture and previously developed its controversial Internet headset, known as Glass.

The reorganization also cements the rise of longtime Google executive Sundar Pichai, who will become CEO for the core Google business. Sergey Brin will be the president and Eric Schmidt will become executive chairman.

The shares rose as much as 5.8 percent in extended trading after the company said Alphabet will be the name of what will effectively be a new holding company.

Last quarter, Google posted $17.7 billion in sales, 90% of which was attributed to advertising it sold through search, partner websites, YouTube and Android. Our two classes of shares will continue to trade on Nasdaq as GOOGL and GOOG.

Larry Page just announced this new parent company for Google and all of its various offspring.

With the change, Sundar Pichai takes the reins as CEO of Google Inc. Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related.

On the financial side, “Alphabet Inc. will replace Google Inc.as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights”.

“Alphabet is mostly a collection of companies”.

Brin will continue to head up Google X in addition to his role as president of Alphabet. What do we mean by far afield? Omid Kordestani, Google’s current chief business officer, will be an adviser to Alphabet. I should add that we are not intending for this to be a big consumer brand with related products.

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