The announcement of the creation of Alphabet the corporate umbrella under which Google will group all divisions, received the blessing of Silicon Valley and Wall Street rewarded shares with a rise of 4.27%.
The technology giant Mountain View (California, USA.) surprised on Monday at the close of Wall Street with the announcement creating a conglomerate that includes Google and other six companies.
Among these companies is Calico, dedicated to research on longevity and signature smart home devices and Fiber Nest, the division seeking to bring high-speed internet to different parts of US.
The new corporate umbrella also include Google X, the research division that develops ambitious projects as the vehicle self and Google Ventures, the venture capital arm of Google and Google Capital , a division that invests in the final stages of financing emerging companies (start-ups).
The decision reflects the opinion of the cofounders of Google, Larry Page and Sergey Brin , the company has become more complex at times that the Mountain View giant pursues ambitious new Page projects beyond its search engine.
“Fundamentally we believe this gives us more room for management to allow us to manage things that are not closely related independently,” said the official blog company.
Investors in Wall Street who have been expressing their concern about the lack of transparency of Google and doubts about the viability of some of their bets, seem breathe easy, at least temporarily, before a decision will better understand the performance of various divisions.
“The goal of all this, apparently, is to communicate to investors the message that understand their demand for greater transparency and that will make that possible, “said told the newspaper The Wall Street Journal Brian Wieser, an analyst at firm Pivotal Research.
It is expected that from the fourth quarter , Google provide different financial results for the core business, which includes search engine, ads, YouTube, Android and Chrome browser – and other divisions Alphabet
Analysts and Jan Dawson, signature Jackdaw Research, believe that the new conglomerate gives freedom to split Alphabet in the future some of his more experimental projects.
Despite having significantly expanded its businesses in recent years, Google still get the bulk of their income, and almost all its benefits, the clicks that people make on ads on your browser.
Google’s revenues totaled 66,000 million dollars last year. Advertising, both in the search engine and YouTube, accounted for 89% of the total.
The sale of mobile applications, as well as music and movies in his shop Play through the Android phones are the second largest source of revenue for the company.
Google was the company that defined the archetype of modern Silicon Valley company, to establish a culture without hierarchy led by the technological talent and where employees have ample room to work on projects they are passionate about, even if they are not related to the core mission of Google, the search network.
The New York Times noted on Tuesday that the creation of the new structure, with which Google tries to find solutions to a wide range of problems, the company offers a model for the evolution of a modern technological company, one that is involved in projects in many parts of the planet.
If successful, the model could be replicated by many other companies.
The new structure also gives Google the flexibility of an emerging company, needed to maintain its leadership in the area innovation.
“We believe that over time companies tend to feel comfortable doing it and just rely on incremental changes,” Page wrote on the company blog.
“But in the technology industry where revolutionary ideas lead the next big growth areas, one has to feel a little uncomfortable to remain relevant,” added co-founder of Google.
It is expected that the actions of Google becoming Alphabet actions. The market capitalization of the company is around 500,000 million.
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