Google’s stock is up about 5% in after-hours trading Monday after company co-founder Larry Page announced the search giant will become a subsidiary of a new umbrella company called Alphabet.
Alphabet will become the publicly-traded entity, Page said. Current holders of Google stock will see their shares automatically converted into shares of Alphabet. Alphabet will continue to be listed as GOOG.
Page will serve as Alphabet’s CEO, while fellow Google co-founder Sergey Brin will have the role of president. Google VP of Products Sundar Pichai will take over as Google’s CEO.
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Here’s more from Page:
What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. 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. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity). Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. 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.
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