Google announced a surprise overhaul of its operating structure on Monday, creating a holding company called Alphabet to pool its many subsidiaries and separate the core web advertising business from newer ventures like driverless cars.
The move appeared to be an attempt by the search engine giant to focus on its more creative and ambitious projects, while investors cheered the potential for more financial disclosures of its disparate business segments.
The new structure could also give Wall Street better insight into Google's investment in moonshot projects such as Google X, a secretive lab that produced the Google Glass wearable device.
"They are aware that they've got this hodgepodge of companies," said Roger Kay, an analyst at Endpoint Technologies Associates. "Maybe it's better to sort them out a bit and make it clearer which ones are bringing in the bacon and which ones are science projects and which ones are long-term bets."
The Mountain-View, California company co-founded by Larry Page and Sergey Brin in 1998 has grown from an Internet search engine to a far-reaching conglomerate that employs more than 40,000 people worldwide.
Google's planned structure resembles the way companies like Berkshire Hathaway and General Electric are organized, with a central unit handling corporate-wide activities such as finance and relatively independent business units focused on specific areas.
Under the new corporate structure, the Google unit will encompass the core search engine as well Google Maps and YouTube.
In addition to Google X, the company's new ventures such as Calico, which focuses on longevity, and connected home products maker Nest will be managed separately. Other units that are part of the new structure include Fiber, for its high-speed Internet efforts, its venture capital arm, Google Ventures, and Google Capital, which invest in larger tech companies.
Alphabet, Inc. will replace Google as the publicly traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all the same rights.
Analysts said the new structure could herald a new era of fiscal discipline and transparency in some of Google's more experimental and opaque business units.
In a filing with the Securities and Exchange Commission, Google said the new arrangement will take effect later this year and that it will likely result in two reportable, financial segments.
Google co-founder Brin will become president of Alphabet, and Eric Schmidt, chairman of Google, will be executive chairman. The company's current directors will become directors of Alphabet.