Google's (NASDAQ: GOOG) OTT juggernaut, YouTube, will remain a part of the company after the search engine giant reorganizes as a number of separate subsidiaries under a new holding company, Alphabet.
Other direct aspects of Google staying in place include, of course, its search engine, its Ads unit, much of Google's infrastructure -- its data centers and related networks -- and its Android and Chrome units. Sundar Pichai will become CEO of the new Google, Inc.
YouTube CEO Susan Wojcicki will apparently remain in charge of the service, according to new Alphabet CEO Larry Page in a letter to investors. "Susan is doing a great job as CEO, running a strong brand and driving incredible growth," Page said. Sergey Brin will serve as president of Alphabet.
Google Fiber, its high-speed broadband service, will become a separate company under the Alphabet umbrella and may rebrand, according to the Guardian.
Analysts were optimistic about the prospects for Alphabet in general, but cautious on whether the new holding company will help provide more transparency into Google's many initiatives, like its home-automation company Nest; its research wing, Google X; and its investment units, Google Ventures and Google Capital.
Jackdaw Research analyst Jan Dawson said in a Wall Street Journal article that "the bottom line doesn't change, but at least you know what the moving parts are" when it comes to each unit's profitability. Google has played its cards close to the vest during earnings season, blending YouTube earnings into its overall Sites and Ads earnings, for example.
Edison Investment Research analyst Richard Windsor was less confident that Alphabet will be the panacea to Google's corporate woes. "Google's restructuring should bring some improved visibility and flexibility into Google but the corporate governance problem looks certain to remain," he said in an investment note.
Reorganizing under Alphabet will give each separate company more flexibility and speed, as well as help make acquisitions and retain talent, Windsor said. "However, how this would work should one of these outside ventures become so successful that it needs to become part of the core business is uncertain."
For Google, Inc., and YouTube -- a very important part of the business on its video ad revenue alone, not to mention its continuing popularity -- being more agile may be essential as competitors like Facebook (NASDAQ: FB) and Twitter crowd in with their own ad-supported, short-form video plays.
For more:
- see this WSJ article (sub. req.)
- see this Guardian article
- see Google's investor letter
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