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Google To Restructure as New Company Called Alphabet

Google today said it will create a new publicly traded company called Alphabet, which will serve as the parent for its separate business units including Google itself. Larry Page, Google's cofounder and CEO, will lead Alphabet with Cofounder Sergey Brin as president.

The move is clearly the largest restructuring in the company's history and a major change in organizational makeup for any company its size. The creation of Alphabet aims to separate Google's core search and cloud business from other groups such as the company's investment companies, its Calico life sciences business and Xlab, the incubator for new technologies such as drones, Page said in a blog post announcing the planned move.

"Our company is operating well today, but we think we can make it cleaner and more accountable," Page said. "Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We'll also make sure we have a great CEO for each business, and we'll determine their compensation. In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole."

Details of the new organization are still unfolding but it appears Google is looking to provide a new reporting structure to make its business attractive to investors. Page said by leading the parent company, he and Brin can focus more on emerging businesses, while turning Google over to Sundar Pichai, who will take over as CEO. Pichai is currently Page's top lieutenant at Google.

Ruth Porat, who recently took over as Google's CFO, will assume that role at Alphabet. The name of the parent company has raised some eyebrows. "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," Page said.

Page emphasized the goal isn't to establish Alphabet as a consumer brand. "The whole point is that Alphabet companies should have independence and develop their own brands."

Posted by Jeffrey Schwartz on 08/10/2015 at 3:59 PM


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