Google Becomes a Subsidiary of Alphabet



Alphabet: Google’s parent company

Google (GOOG) recently announced the creation of its parent company, Alphabet. Larry Page, founder and CEO of Google, announced the separation of Google’s core business of search and advertising from its diversifying businesses. These diversifying businesses include self-driving cars, shopping features on YouTube, building drones, and many others.

The parent company will be led by Larry Page as its CEO along with Google co-founder Sergey Brin, who will serve as the president of Alphabet. Other notable leaders for Alphabet include executive chairman Eric Schmidt and the newly appointed Chief Financial Officer, Ruth Porat, who will oversee both Alphabet and its subsidiary Google. Sundar Pichai will serve as Google’s CEO. Pichai previously served as the senior vice president of Google.

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Better-than-expected 2Q15 results

Google shares increased by only 9% on the S&P 500 index in the last 12 months through June 2015. In comparison, competitors Facebook (FB), Amazon (AMZN), and Apple reported share price increases of 32%, 32%, and 26%, respectively.

However, Google reported better-than-expected second quarter results with a revenue increase of 11% year-over-year to $17.72 billion. Currency headwinds shaved 7% from Google’s revenue growth rate in 2Q15. Amazon surprised investors with its better-than-expected results. Amazon’s stock rose by 18% after the release. eBay (EBAY) reported a rise in its revenue by 7% year-over-year to $4.4 billion. The strong dollar (UUP) negatively affected eBay’s revenue growth by 5%.

Facebook’s total non-GAAP (generally accepted accounting principles) operating expenses rose 82% year-over-year in 2Q15 compared to its year-over-year revenue growth of 39%.


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