Since its inception, Page and Brin had massively diversified Google from its origins as an internet search engine to invest in several projects that were unrelated to its core business such as self-driving cars, renewable energy, wearable technology, artificial intelligence, mapping services, and the Android operating system. According to them, Google being just a search company, no matter how successful, would not be able to consolidate its position in the highly competitive tech market without diversifying. ..

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THE A TO Z OF ALPHABET

On October 2, 2015, Alphabet became the parent holding company of Google and its diverse set of businesses with no business operations of its own. The restructuring was carried out under a Delaware General Corporation Law called Section 251(g), according to which a company incorporated in the state could create and merge with a holding company without the consent of shareholders. Under Section 251(g) DGCL, Google incorporated Alphabet Holding as its wholly-owned subsidiary and, in turn, caused Alphabet to merge with Maple Technologies (a Merger Sub), to form a Google Merger Sub. . ..

A GOOD MOVE?

According to some analysts, the new structure was a smart way for Google to pursue long-term growth while simultaneously increasing transparency and management focus on the core business. According to Eric Bradlow, co-director of the Wharton Customer Analytics Initiative, “On net, [the restructuring] is probably a good move for branding, positioning,

CRITICISM

Some analysts were, however, skeptical about the level of clarity the regorganization would actually bring as it was not clear how much of its quarterly financial information Alphabet was willing to share. They felt that the financial details disclosed by the new company were more or less similar to the ones discussed in Google’s earlier earnings reports with only the labels being changed and other minor details added. Alice Truong Deputy growth editor at Quartz, Asia, commented, ...

INITIAL RESULTS

Beginning the fourth quarter 2015, Alphabet reported separate financial results for the core Google business and the remaining Alphabet businesses as ‘Other Bets’. In the fourth quarter, Google’s revenues were US$21.3 billion, topping analyst expectations of US$20.77 billion up by 18% year-over-year. A majority of Alphabet’s earnings were derived from Google’s core search business. In fiscal 2015, Google’s revenues were US$74.5 billion and it generated profits of US$23.4 billion. In contrast, “Other Bets” posted revenues of US$448 million and reported an operating loss of US$3.56 billion...

CHALLENGES

According to industry experts, Alphabet’s ‘Other Bets’ were turning into financial black holes as they had been losing billions of dollars annually. Reportedly in the fourth quarter of 2016, Alphabet had lost nearly US$1.1 billion from its ‘Other Bets’ division. In 2016, the total loss posted by this division was about US$3.6 billion. ..

THE ROAD AHEAD

As of November 2016, Alphabet was the second most valuable company in the world, worth around US$528 billion, not far behind Apple, valued at US$589 billion, and ahead of Microsoft Corporation , valued at US$468 billion. Analysts said Alphabet’s other companies were wildly ambitious and they would hardly make a dent in Google’s finances owing to the huge profitability of Google’s search business. According to them, Alphabet was a catalyst that could bring together human talent, technology scale, long-horizon venture and investment approaches to build new business models that could challenge rivals in a wide array of industries in the future. For instance, Alphabet could be attractive to technologists working at GE and Microsoft Research and if the company could scale up ventures like Google ...

EXHIBITS

Exhibit I:Google’s Structure 2014-2015 (Before Reorganization)
Exhibit II: Google's Reorganization under DGCL Section 251 (g)
Exhibit III: Structure of Alphabet Inc
Exhibit IV: Alphabet’s Top Management
Exhibit V Alphabet Inc-Code of Conduct for Employees
Exhibit VI: Alphabet vs Apple
Exhibit VII:Alphabet Inc-Segment wise Consolidated Revenues
Exhibit VIII:Alphabet Inc: 2015-2016 Quarterly Revenues
Exhibit IX: Stock Price Chart of Alphabet Inc (April 2014-February 2017)