Google cooks Alphabet soup

Aug. 11, 2015
In a surprise move, Google has created a parent holding company called Alphabet. Google will become a wholly owned subsidiary of Alphabet (whose URL is abc.xyz -- yes, really), as will organizations focused on many of the company's other ventures, such as driverless cars. Google founders Larry Page and Sergey Brin will be CEO and president, respectively, of the new umbrella company.

In a surprise move, Google has created a parent holding company called Alphabet. Google will become a wholly owned subsidiary of Alphabet (whose URL is abc.xyz -- yes, really), as will organizations focused on many of the company's other ventures, such as driverless cars and Google Fiber. Google founders Larry Page and Sergey Brin will be CEO and president, respectively, of the new umbrella company.

Senior Vice President Sundar Pichai becomes the new CEO of Google. No other new CEOs were announced.

"Alphabet is mostly a collection of companies. The largest of which, of course, is Google," writes Page in a blog titled "G is for Google." 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. The two classes of shares will continue to trade on NASDAQ as GOOGL and GOOG.

"This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead," writes Page. "Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. 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."

The company also will begin segment reporting with its Q4 results. This means Google financials will be provided separately from the other companies under the Alphabet umbrella.

"We liked the name Alphabet," adds Page, "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! I should add that we are not intending for this to be a big consumer brand with related products – the whole point is that Alphabet companies should have independence and develop their own brands.

"For Sergey and me this is a very exciting new chapter in the life of Google -- the birth of Alphabet. Don’t worry, we’re still getting used to the name, too!"

For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer's Guide.