Alphabet - Making Interesting Pivots
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Alphabet, Inc. is a holding company, which engages in the business of acquisition and operation of different companies. It operates through the Google and Other Bets segments. The Google segment includes its main Internet products such as ads, Android, Chrome, hardware, Google Cloud, Google Maps, Google Play, Search, and YouTube.
The Other Bets segment consists of businesses such as Access, Calico, CapitalG, GV, Verily, Waymo, and X. The company was founded by Lawrence E. Page and Sergey Mikhaylovich Brin on October 2, 2015 and is headquartered in Mountain View, CA.
Alphabet - Company Highlights
| Startup Name | Alphabet Inc. |
|---|---|
| Headquarters | Googleplex, Mountain View, California, U.S. |
| Industry | Conglomerate |
| Founded | October 2, 2015 |
| Founder | Larry Page, Sergey Brin |
| CEO | Sundar Pichai |
| Areas Served | Worldwide |
| Website | www.abc.xyz |
Alphabet - About and How it Works ?
Alphabet - Logo and its Meaning
Alphabet - Founder and History
Alphabet - Mission
Alphabet - Team
Alphabet - Subsidiaries
Alphabet - Business Model
Alphabet - Revenue and Growth
Alphabet - Investments
Alphabet - Acquisitions
Alphabet - Competitors
Alphabet - Challenges Faced
Alphabet - Future Plans
Alphabet - About and How it Works ?
Alphabet Inc. is an American multinational conglomerate headquartered in Mountain View, California. It was created through a restructuring of Google on October 2, 2015, and became the parent company of Google and several former Google subsidiaries. The two co-founders of Google remained as controlling shareholders, board members, and employees at Alphabet. Alphabet is the world's fourth-largest technology company by revenue and one of the world's most valuable companies.
The establishment of Alphabet Inc. was prompted by a desire to make the core Google business "cleaner and more accountable" while allowing greater autonomy to group companies that operate in businesses other than Internet services. Page and Brin announced their resignation from their executive posts in December 2019, with the CEO role to be filled by Sundar Pichai, also the CEO of Google. Page and Brin remain co-founders, employees, board members, and controlling shareholders of Alphabet Inc.
Alphabet - Logo and its Meaning
The Alphabet logo uses the language of visual symbols to explain the differences between the companies, Google and itself. In comparison with the Google logo, it looks more serious, like a grown-up in comparison with a teenager.
Alphabet - Founder and History
On August 10, 2015, Google Inc. announced plans to create a new public holding company, Alphabet Inc. Google CEO Larry Page and Sergey Brin made this announcement in a blog post on Google's official blog. Alphabet would be created to restructure Google by moving subsidiaries from Google to Alphabet, narrowing Google's scope.
In his announcement, Page described the planned holding company as follows:
Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main internet products contained in Alphabet instead. Fundamentally, we believe this allows us more management scale, as we can run things independently that aren't very related.
Page says the motivation behind the reorganization is to make Google "cleaner and more accountable and better". He also said he wanted to improve "the transparency and oversight of what we're doing", and to allow greater control of unrelated companies.
Alphabet still keeps Google’s stock price history and trades under its former ticker symbols. Its website domain is abc.xyz (xyz was introduced in 2014). When asked about the new name, CEO Larry Page said that it was chosen because the alphabet is the building block of language, one of the most important innovations. He also said that it is the core of how the firm indexes with Google Search.
On December 3, 2019, Page and Brin jointly announced that they would step down from their respective roles, remaining as employees and still the majority vote on the board of directors. Sundar Pichai, the CEO of Google, is to assume the CEO role at Alphabet while retaining the same at Google.
Alphabet - Mission
Alphabet's mission statement says, "Empowering great entrepreneurs and companies to flourish. Investing at the scale of the opportunities and resources we see. Improving the transparency and oversight of what we're doing. Making Google even better through greater focus."
Sarika Anand
Alphabet - Team
- Larry Page and Sergey Brin - Founders
- Sundar Pichai - CEO
- Andrew Urman - Program Manager
- Thomas Insel - Google Life Sciences Team
- David Drummond - Senior Vice President of Corporate Development
- Eric Schmidt - Executive Chairman
- Barnaby James - Principal Software Engineer
Alphabet - Subsidiaries
Few of the main subsidiaries of Alphabet are Google, X, Sidewalks Lab, Waymo, Calico, Verily, Fitbit, Deepmind, Wing and Firebase.
Alphabet - Business Model
Alphabet, Inc. is a holding company for Google and several other firms formerly owned by Google. The corporation operates two reportable business segments:
- Google – Consists of various Internet products, including Search, YouTube, Maps, Commerce, Ads, Android, Cloud, Apps, Chrome, and Google Play, as well as hardware products such as Chromebooks, Chromecast, and Nexus. This segment accounts for the vast majority of Alphabet’s revenues.
- Other Bets – Consists of various operating segments that the company deems “not individually material” (do not meet certain quantitative thresholds). These include the companies Access/Google Fiber, Google Capital, Calico, Verily, Next, GV, and X, and other initiatives.
Sarika Anand
Alphabet - Revenue and Growth
Alphabet has one primary revenue stream, online advertising from third parties. It is divided into two main categories:
Performance Advertising – Creates relevant ads that users click, resulting in direct connection with advertisers. Most of the third parties pay Alphabet when a user engages in the ads.
Brand Advertising – Increases users’ awareness of advertisers’ offerings through video, images, text, and interactive ads that play across different devices. Alphabet helps third parties display digital videos and other ad types to specific audience groups for their marketing campaigns.
Alphabet revenue for the twelve months ending September 30, 2020 was $171.704B, a 10.74% increase year-over-year. Rest of the years' trends are :
| Year | Amount | Percentage Change From Last Year |
|---|---|---|
| 2019 | $161.857B | +18.3% |
| 2018 | $136.819B | +23.42% |
| 2017 | $110.855B | +22.8% |
Alphabet - Investments
Alphabet has made 11 investments. Their most recent investment was on Jul 15, 2020, when Cityblock Health raised $53.5M.
| Date | Organization Name | Round | Amount |
|---|---|---|---|
| Jul 15, 2020 | Cityblock Health | Series B | $53.5M |
| Jun 26, 2020 | Oscar Health | Venture Round | $225M |
| May 7, 2020 | Lime | Venture Round | $170M |
| May 7, 2020 | Sidewalk Infrastructure Partners | Series A | $400M |
| Mar 2, 2020 | Waymo | Venture Round | $2.3B |
| Aug 14, 2018 | Oscar Health | Corporate Round | $375M |
| Jul 9, 2018 | Lime | Series C | $335M |
| Jun 14, 2018 | SpinLaunch | Series A | $40M |
| Jan 24, 2018 | XtalPi | Series B | $15M |
| Nov 15, 2017 | UnitedMasters | Series A | $70M |
Alphabet - Acquisitions
An analysis of the company's investments in 2017 suggested that it was the most active investor in that period, outdoing the capital arm of Intel and also its own best customer. Alphabet, Inc. acquired seven of its own capital-backed startups in the 2017 financial year, with Cisco second having acquired six of the company's previous investments.
Flatiron Health, a startup founded by two former Google employees and backed by Alphabet, Inc., announced that it was to be acquired by health conglomerate Hoffmann-La Roche for $1.8 billion. The company provides electronic medical records and analysis to identify improved treatments for oncology patients
Alphabet - Competitors
Alphabet, Inc.'s top competitors are Baidu, Microsoft, Apple, Amazon, Facebook, Oracle, SAP, IBM, Salesforce, Sony, HP, SAS, Box, Dell, Samsung, HTC, Huawei, LG Electronics, Philips, ASUS, Cisco, Lenovo, AWS, Toshiba, Motorola, VMware, Adobe and Infor.
Alphabet - Challenges Faced
Growing Regulatory Risks - Alphabet formally acknowledged the government’s antitrust probe earlier this year, but it isn’t just U.S. federal law enforcement officials taking a harder look at Alphabet’s business practices. In addition to FTC and DOJ investigations, a coalition of state attorneys general are participating in an antitrust probe of the company. In Europe, Alphabet has faced record fines in recent years for antitrust violations, and the European Commission, the EU’s antitrust regulatory body, recently opened an investigation into Google’s data collection practices, and may include data related to local search services, advertising, ad targeting, login services, web browsers, and others, according to Reuters.
A recent Wall Street Journal investigation found that contrary to some of the company’s claims, it routinely intervenes in search results, even favouring the results generated by big businesses such as eBay over smaller ones. Any such activity is likely to draw the attention of regulators, as well.
Shoring Up Growth, Profits - For the third quarter, Alphabet posted a mixed earnings report that revealed better-than-expected revenue, but a hit to its earnings -- earnings per share came in at $10.12 versus estimates of $12.42. One reason for that miss, as noted by RealMoney’s tech columnist Eric Jhonsa, was accelerating operating expense growth, along with spending on R&D, sales and marketing and other expenses. It also recorded a net loss in its equity investments last quarter, posting a loss of $1.53B loss versus a $1.38B gain in the third quarter of last year.
Alphabet’s reputation for secrecy often works against it when its updates to investors are mixed. After its first quarter earnings call, for example, Alphabet’s stock hit the skids for weeks -- partly owing to management’s lack of clarity in explaining its missed quarterly revenue and how it might have been affected by changes to its ad products. Meanwhile, investors have expressed frustrations that Alphabet doesn’t break out YouTube revenue, although it’s been long presumed to be a top driver of ad revenue growth for Google.
Sceptical Employees - Alphabet is still one of the most sought-after employers in Silicon Valley. But a vocal contingent of its workers disagree with the company’s policies and direction. For instance,  Pichai navigated Google through a worker revolt last year over Project Maven, a contract with the military to analyse drone footage. (Google did not renew the contract.)
Sarika Anand
Alphabet - Future Plans
Alphabet Inc., the parent company for the search engine Google, will look to become just the third US-listed company to enter the $1 trillion market cap club in 2020. The stock will need to rise by about 8% between now and the end of 2020 to join this exclusive club. It isn’t going to be an easy task for the equity, especially if earnings growth slows as analysts project.
The company has already made some interesting pivots heading into 2020. Most notably is at the very top, with Sundar Pichai the CEO of Google also becoming the CEO of Alphabet, taking over the position for co-founder Larry Page.
Google CEO Sundar Pichai says the company has offered a competitive platform that has lowered prices advertisers, giving consumers more choice, according to prepared remarks the executive made ahead of Wednesday’s hearing before the House Antitrust Subcommittee.
“A competitive digital ad marketplace gives publishers and advertisers, and therefore consumers, an enormous amount of choice,” Pichai stated. “For example, competition in ads — from Twitter, Instagram, Comcast and others — has helped lower online advertising costs by 40% over the last 10 years, with these saving passed down to consumers through lower prices.”
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