Google has surprised the market with an announcement of corporate restructuring. Google is a huge name in the market and the news about restructuring has set the investors on their heels.
Alphabet:
The news aired that Google would be changing its name to Alphabet. But in the announcement, the company confirmed the formation of a new holding company with the name Alphabet. All the services that are directly facing the consumers like the search engine, YouTube, Maps, Gmail and Android phone software will continue under the name of Google. Alphabet will own all the current initiatives and businesses of Google. Google does not plan on using the new name for consumer facing services as mentioned earlier.
Non Famous Businesses:
Apart from the famous and well known services and businesses by Google like YouTube video service, Android software for phones and the Google search engine, Google owns some less popular businesses as well. These less famous, less developed and less profitable businesses by Google include smart thermostat maker Nest for which Google paid $3.2 billion last year. It also commenced a medical unit, Calico for taking on the modest challenge of extending the human longevity by the use of data and biotechnology to possibly cure cancer. Google has also experimented on a number of innovations like self-driving cars fiber optic broadband service and internet balloons. These inventions did not generate any revenue for the company and added to the total expenses. But with restructuring, the company will tell Wall Street for the first time how profitable its core business is.
Shares of Google:
The deal is expected to be closed by the end of this year. The company does not need a shareholder vote over its decision to restructure the company. The shares that trade under the symbol ‘GOOG’ and ‘GOOGL’ will now be traded under the name Alphabet but that would not make any difference as Alphabet owns all the assets that Google owned.
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