Google to trade as Alphabet, installs new CEO

August 10, 2015 | Last updated on August 10, 2015
2 min read

Big changes are happening at Google.

The ubiquitous search engine will become a wholly owned subsidiary of a new company called Alphabet Inc., which will be run by Google’s founders, Sergey Brin (president) and Larry Page (CEO). Sundar Pichai, 43, formerly a senior VP at Google, will be Google’s new CEO.

On Google’s official blog, Page states, “Alphabet Inc. will replace Google Inc. as the publicly traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. Our two classes of shares will continue to trade on Nasdaq as GOOGL and GOOG.”

Alphabet is a collection of Google and its related companies, including Life Sciences (known for developing a glucose-sensing contact lens), and Calico (a company focused on longevity). “Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related,” Page writes. “In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed.”

Entities that will stay within Google include its mobile operating system Android, video streaming service YouTube, and the search engine itself.

The company’s SEC filings state that its Q4 earnings report will separate Google’s and Alphabet’s financial results. The filings also state “the new legal and operating structure will be introduced in phases over the coming months.”

Google reported more than $14 billion in profit on $66 billion in sales last year, most of it from lucrative Internet advertising, while other ventures have required large investments without showing immediate returns. GOOGL closed at $663.14 on Monday, down 0.19% from the previous close. The stock was up more than 6% in after-hours trading.