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GOOGLE Demerge ALPHABET AND IT‘s FUTURE

Submitted to :- Prof. Renu Singh

Submitted by :- Md Wasim Ansari

• A part of existing company - a new company - which operates separately

• Shareholders of original company get equivalent stake in new company

• Segments operate smoothly and focus on specific task• Reasons for demerger:

to concentrate on core activities to comply with the laws & regulations of the place where it wants to establish its

presence division reached a point where it would be more profitable for it to become a

separate entity parent company changing direction so division spun off so that division can meet

needs of existing clients and parent can focus on new markets basic idea – demerger will prove beneficial to all parties concerned

Demerger

Reasons for demerger:

(1)Corporate attempt to adjust to changing economic and political environment of the country;(2)To correct the previous investment decisions where the company moved into the operational field having no expertise or experience to run the show on a profitable basis;(3)To help finance an acquisition;(4)To realize capital gains from the assets acquired at the time when they were under performing and now no better performance, capital gain can be realized;(5)To make financial and managerial resources available for developing other more profitable opportunities;(6)Selling unwanted and surplus or unconnected parts in the business as a restructuring strategy to get rid of sick part of the company.

Benefits

Greater flexibility

Adopt independent capital structures

Greater investment choice for shareholders

Closer Alignment

Driving accountability

A Brief History of Google• Google's mission is to organize the world's

information and make it universally accessible and useful

• 1996 Search Engine created as research project by Larry Page and Sergey Brin at Stanford University

• 1998 Incorporated as a privately held company• 1999 Offered for sale to Excite for $1 million,

Excite turned down the offer• 2000 AdWords released as Google’s advertising

plaYorm• 2004 IPO, market capitalization of more than $23

billion

WhyRestructure into Alphabet?

• Getting more ambitious things done• Taking the long-term view• 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• And hopefully…as a result of all this, improving the lives of as many

people as we can- Alphabet Inc. CEO Larry Page

The Structure of a“Simple” Corporate Restructure• Alphabet was created as a subsidiary directly owned by

Google Inc., with Google as the owner and Alphabet as the subsidiary. Afterwards, the roles were reversed in a two-step switch:– First, a dummy subsidiary of Alphabet was created.– Google then merged with the new dummy subsidiary while converting

Google stock to Alphabet stock. The post-merger subsidiary, no longer a dummy, changed its name to "Alphabet Inc." The corporate reorganization was done without a shareholder vote, which is allowed under Delaware law.

• The restructuring process was completed on October 2, 2015. Alphabet kept Google Inc.'s stock price history and continues to trade under Google Inc.'s former ticker symbols "GOOG" and "GOOGL;" both classes of stock are components of major stock market indices such as the S&P 500 and NASDAQ-100.

Results of the Restructure• Made it easier for investors to track the revenue from

Google vs the other divisions of Alphabet• Earnings divided into two main categories

– Google: Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome, Google Play and hardware products, such as Chromecast, Chromebooks and Nexus

– Other Bets: Google Fiber, Calico, Nest, Verily, GV Google Capital, X and other initiatives

• First financial report after restructure– Alphabet total fourth quarter revenue $21.33 billion– Google division $21.178 billion revenue– Other Bets $448 million revenue and $3.6 billion operating loss– Total 2015 revenue 74.5 billion

• Briefly became the world’s most valuable company• $516 billion market capitalization (as of April 1, 2016) with

$73 billion in cash on hand

Alphabet Subsidiaries• Calico (biotech research and development)• Google Capital (growth equity fund)• Google Fiber (broadband internet and

cable television)• GV (venture capital investment)• Jigsaw (cross-sector, inter-disciplinary

think tank)• Nest Labs (home automation)• Sidewalk Labs (urban innovation)• Verily (research organization devoted to

the study of life sciences)• X (semi-secret R&D of “Moonshots”)• Google (Search, Ads, Commerce, Maps,

YouTube, Apps, Cloud, Android, Chrome, Google Play and hardware products, such as Chromecast, Chromebooks and Nexus)

Google Capital• Late-stage growth venture capital fund financed by

Google, founded in 2013• Focused on larger growth stage technology

companies• Invests for profit, not strategic acquisitions

for Google• Additional support has included giving recipient

companies access to Google's employees and knowledge base, with the goal of encouraging the growth of the companies they invest in

Google Fiber• Google's fiber-to-the-premises service in the United States, providing broadband

internet and cable television service• Fiber run underground to “Google Fiber Huts”. From the “huts”, the fiber cables

travel along utility poles into neighborhoods and houses, and stop at a Fiber Jack (an Optical Network Terminal) in each house.

• Speeds up to 1 Gigabit/s. Download high def. movie in under one minute• Google Fiber...bar. On April Fools' Day 2012, Google released an announcement

that their product was actually an edible Google Fiber bar instead of fiber-optic Internet broadband.

• Fiber Phone, 2016 (land line phone service)• Announced locations:

– Palo Alto, California (limited test locations 2011)– Kansas City, Kansas & Missouri (2011)– Austin, Texas (2013)– Provo Utah (2013)– Nashville, Tennessee (2015)– Raleigh and Durham, North Carolina (2015)– Atlanta, Georgia (2015)– Southern California (2015)– Salt Lake City, Utah (2015)– Huntsville, Alabama (2015)

Google Fiber Services

Google Fiber Example Setup

GV (formerly Google Ventures)• Venture capital investment division, founded in 2009• As opposed to Google Capital, GV provides seed, venture, and growth stage

funding to life science, healthcare, artificial intelligence, robotics, transportation, cyber security and agriculture.

• Operates independently and makes financially driven investment decisions• Invested in over 300 companies, including:

X (formally Google X-Labs)• Semi-secret research and development subsidiary• Projects are often referred to as "moonshots”• Current projects in development

– Project Self-Driving Car• Equipped a variety of vehicles with the self-driving equipment, including the Toyota

Prius, Audi TT, and Lexus RX450h. Also custom built a fleet of cars. The vehicles had driven over 1,000,000 miles as of June 2015. Public road testing of driverless cars is legal in California, Michigan, Florida, Nevada, Arizona, North Dakota, Tennessee, and the District of Columbia as of Feb. 2016. Projected availability to the public in 2020.

– Project Wing• Rapid delivery of products across a city by using drones

– Project Glass• Augmented reality head-mounted display

– Project Loon• Provide large scale internet access by creating a network of balloons flying through

the stratosphere– Additional projects

• An artificial neural network for speech recognition and computer vision• The web of things, a way of connecting real-world objects to the Internet• Smartphone batteries that last significantly longer

GOOGLE

Thank You!