Google To Form New Holding Company "Alphabet"

(RTTNews) - Google Inc (GOOGL, GOOG) on Monday said it plans to morph into a conglomerate that will subsume each of its businesses and separate heads manning its diverse interests. Google shares jumped 6 percent in after-hours trade, upon the announcement.

Shedding light on its plan, ostensibly meant to placate investors, Google said it will form a holding company "Alphabet Inc" that will accommodate its core search and ad business as well as disparate pursuits spanning health and self-driving cars.

Larry Page, co-founder and chief executive officer of Google, will become the CEO of Alphabet. Sergey Brin, another co-founder, will be the new company's president, and Eric Schmidt, Google's executive chairman, will assume that position at Alphabet.

Sundar Pichai, currently Google's senior vice president of products, will become the Google CEO.

"We've long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant," Page said in a blog post.

Alphabet will replace Google as the publicly traded company, and all Google shares will convert into an equivalent number of Alphabet shares and the new company will retain the ticker symbol "GOOGL" and "GOOG".

Page said that in its fourth quarter, the company will provide separate financial results for each of its businesses.

Under the new structure, the company's main Google business will include search, ads, maps, apps, YouTube and Android and the related technical infrastructure.

Businesses such as Calico, Nest, and Fiber, as well as its investing arms, such as Google Ventures and Google Capital, and incubator projects, such as Google X, will be managed separately from the Google business.

The restructuring follows pressure from investors over the enormous investments Google has made in non-core areas, including driverless car and other path-breaking technologies.

It also relieves Page from the of day to day operations of the company and enable him to have broader control of the entire organization, while hoping Sundar Pichai will propel the key search and ad business to greater heights.

GOOGL closed Monday at $663.14, down $1.25 or 0.19%, on the Nasdaq.