Google recently moved on to the creation a new Parent company called Alphabet. This move can be probably translated as the company’s effort of restructuring while at the same time Google will get the chance to let all investors know that the clear separation of Google’s activities, which they’ve been requesting for a long time now, has been done.
All the central and more profitable activities will keep being operated by Google itself while the more experimental and ambitious projects will be held by Alphabet. Lawrence “Larry” Page, cofounder of Google Inc. will is the new CEO of Alphabet Inc. while Pichai Sundararajan, better known as Sundar Pichai, was announced as the next CEO of Google only yesterday, on August 10, 2015. As for Sergey Brin, the second cofounder of Google, he is now the president of Alphabet.
Under Alphabet’s umbrella more ambitious projects will be held such as the Calico (a project that works and conducts ground breaking researches on the health industry), Google X (which is more known for its research on the smart cars) and Google Fiber (a project that works on the development of networks). Other projects that Alphabet will be in charge of are the Nest and the Google Ventures.
Thanks to this move, Google’s shares increased by 6.1% in the last few days as the analysts welcomed the company’s idea to create a new Parent company. Scott Devitt, an analyst from the investment bank Stifel upgraded the recommendation of the share to buy from hold supporting that Google’s move is an effort to become the Berkshire Hathaway (the company of the billionaire Warren Buffett) of technology, something that clearly can only be judged positively.
But there is an important difference. Berkshire Hathaway includes a large number of businesses that can function independently as they are already profitable, whereas almost every part of Alphabet is not proven to bring some money to the table. This means that even if the projects held be Alphabet are independent on every other aspect, they will still be depending from Google when it comes to the budget.
The news are big in this case and we expect to see what Google’s next move will be as well as Alphabet’s too. It seems for now at least that there are no downsides to Google’s decision, but until the new company is established, nothing can be taken for granted. Stay tuned to read all the latest news on this and many other hot topics!