Google Becomes Alphabet (But Search Remains the Same)
The creation of Alphabet is a move designed to quiet investor concerns about how much money the search giant is spending on radical innovations like driverless cars, but won’t impact Google’s search business. Under the new plan, the transfer of Google cash to satellites and subsidiaries will be significantly more transparent.
Alphabet’s executive team is drawn from Google all-stars including co-founders Larry Page and Sergey Brin at the CEO spot and president spots. Roth Porat will fill the spot of holding company CFO.
In an interview with Bloomberg News, B. Riley analyst Sameet Sinha described the strategy behind Alphabet’s executive lineup saying:
Sergey and Larry will be able to allocate their time differently between the core and non-core businesses, You have Sundar focusing on the core business, and you will have Larry and Sergey kind of looking at the future growth businesses.
News of Alphabet’s emergence was music to the ears of exactly the people it was aimed, the investor class. Shares of the search giant rose 4.1% with the announcement and closed at $690.30.
As to why Google picked Alphabet, which it hopes becomes as ubiquitous as its origin, Page explained in a statement to Wall Street investors saying:
We liked the name Alphabet because it means a collection of letters that represent language, one of humanity’s most important innovations, and is the core of how we index with Google search! We also like that it means alpha-bet (Alpha is investment return above benchmark), which we strive for!
Google will be implementing the rise of Alphabet in stages throughout the next twelve months.