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Google’s Corporate Structure Shift

Yesterday Google’s Co-founders Larry Page and Sergey Brin announced a new and unexpected solution for the corporate structure of the company: creating a new holding company structure to separate Google’s core Internet businesses from the other non web related services and companies.

The Holding’s name will be Alphabet Inc. and the decision was primary done in order to differentiate the core business from the other non core businesses; this to finally reach clarity in the financial results and to separate the profitable business (web-related) from the venture capital firm and other research businesses such as autonomously driven cars and DNA research.

According to many analyst the decision took inspiration from the way Warren Buffet has so far managed to shape Berkshire Hathaway in the recent years. But first of all the decision is much more practical than strategic, as the first as next impact will be simplicity to read and interpret the periodicals reports, because investors will be able to access different reports for each company belonging to the new conglomerate business. We have to say that besides the first impact results, this change will grant more financial and strategic autonomy to each division and thus it will allow research branches not to worry about influencing Google’s core business results with their intensive investing activities.

The market reaction was positive, as the stock price increased by 7% right after the news spread around the financial markets; there is also to say that the confidence is also present amongst Google’s investors, as the stock increased by more than 20% since the beginning of 2015.

Analyst Opinion

Recently I Know First Research published a full analysis and forecast of Google’s stock and their algorithmic analysis is also bullish on Google’s stock, as also the algorithm they have implemented is forecasting GOOG shares to be an incredibly stable stock in the year ahead.

goog-alg

The above forecast is the forecast from July 30th 2015 and is for the 1-month period, 3 month period and the more long-term period of one year. The forecasts demonstrate that the algorithm predicts GOOG to have a bullish year ahead, with positive signal strengths of 12.49, 11.71 and 12.71 respectively. They have very strong predictability ratings of -0.26, 0.21 and -0.17 which demonstrates that Google’s shares are considered stable and non-volatile.

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