[URL=“http://googleblog.blogspot.com/2015/08/google-alphabet.html”]Welcome to Alphabet?
The hell is going on here. New CEO, and some sort of undecipherable subsidiarizing of the various things Google does under different names?
Interesting way to drop the announcement of Sundar Pichai being the new CEO of Google.
Yep, it looks like Google is just now one element of the company under the holding banner of Alphabet.
Staci D Kramer @sdkstl 1m1 minute ago
on the surface doesn’t look like Google has http://alphabet.com , which is registered to BMW. @alphabet is also taken. $GOOG
Seems pretty clear to me; Google’s investors are upset that they’re pissing away their profits on pie-in-the-sky projects, so Google will be search and core internet services. Alphabet is a holding company, holding Google and everything else (longevity, self-driving cars, android, etc). Makes perfect sense.
Right, but as an investor, can I invest in Google, the search engine? Or can I only invest in Alphabet?
And if I can invest in Google as a separate company from the pie in the sky stuff, why would I ever invest in that other stuff? And how does that other stuff continue to receive funding? I mean…will Google kick money upstairs to Alphabet, which then kicks it back down to Calico or whatever?
In what way is that significantly different?
from the blog post:
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. Google will become a wholly-owned subsidiary of Alphabet. Our two classes of shares will continue to trade on Nasdaq as GOOGL and GOOG.
Yeah, their accounting will be separate now, I suppose.
Right, but third party investors are still stuck with investing in GOOGL or GOOG. As the NYT just put it, this is more the Berkshire Hathaway model. Seems like more a spur to force the pure research areas of Google into applied revenue generation as an endpoint.
Yes they did. I searched in vain for a story on the Wall St. Journal on the change and Bloomberg just started reporting 30 minutes ago. So if you want a new career as a tech reporter… :-).
The executive team has long being admirers of Buffett and this structure is quite similar to how Berkshire Hathawy operates with the operating company sending profits up to the holding company, and Warren and sending some of capital down, and using the rest to buy new companies.
“Alphabet” also has that menacing ring to it, like “Umbrella”. Somewhere in their disclaimers they’ll have smartly reworded “Don’t be evil”.
There we go.
So, instead of the profits generated by Google’s search engine and other revenue-earning arms like Youtube getting kicked directly over to the non-revenue areas, instead the money gets kicked upstairs. X amount of that revenue is invested and used to make more money. y amount is kicked down to non revenue sections of the company.
That makes some sense, though it’s still a little unclear why Google couldn’t have just done that without the reorg.
Pity poor Chris Andrakanich. He signed on to Twitter fairly early, in April of 2007.
Got the name @alphabet.
Guessing his phone is in constant buzz mode right now.
Chris Andrikanich @alphabet
Well, that was an interesting way to end a Monday…
Official Alphabetsite. I applaud the creative use of the xyz domain, and now I know two sites that use said domain.
This reminds me of the earlier days of Activision Blizzard, where you weren’t supposed to use the “Activision Blizzard” name unless you were a finance reporter talking about the holding company specifically.
Suzanne SpectorVerified account
@SuzanneSpecNYT
What stays in Google: search, ads, maps, YouTube, Android.
What goes to new co.: Nest, Fiber, X, Ventures.
Handy chart from NYT!
Also, Google Ventures was a big investor in Uber, and I guess now, they can make those sorts of investments without appearing to conflict with any of Google’s actual projects? I dunno, I’m not a biz guy.
Alphabet Inc. @aIphabetinc 33m33 minutes ago
Hello, world!
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The amount they spend on those other companies is fairly small compared to Google.
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Google stock is now Alphabet stock, so you have the same exposure to those random investments as before if you’re a shareholder.
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There is no external shareholder of Google/Alphabet who is powerful enough to tell management what to do anyway. I’m sure management owns plurality shares.
I’ve seen this with companies in the pharmacuetical industry. The established products go to one company and the developing products go to the other. I’m sure that there is a sound business reason for this in the context of a large corporation. My guess is that investment in one is more speculative and bigger gains are possible while the legacy products produce a steady cash flow It may also have to do with patent expirations on legacy products as well.
I’m sure patents are totally irrelevant in this situation. They are critical for pharmas to lock in the ludicrous profits on non-generics, but Google mainly uses them to defend Android, and indeed has been giving away or releasing a great many of them.