Google (GOOG) has revamped its operating structure to separate its main search and advertising business from so-called 'moonshot' ventures, such as self-driving cars, robots and nanoparticles. Alphabet will be led by the group's current leaders and will sit above Google and an eclectic range of other subsidiaries, each with its own chief executive.
The main search business, YouTube, the Android and Chrome operating systems and other key interests will be housed in the Google division. Management thinks the new structure will help it to run independent, unrelated businesses - such as connected-home business Nest, health research lab Calico and Google Ventures - more effectively. Google will report financial results for each of its new divisions from the fourth quarter of this financial year, giving investors a clearer picture of the business.
New finance director Ruth Porat's commitment to improving transparency and reining in costs has improved market sentiment and put Google firmly on the growth track. Strong demand for mobile search and YouTube drove underlying sales up 18 per cent in the second quarter. Together with diligent cost control, that meant its operating margin widened by two percentage points to 34 per cent.
Broker JPMorgan expects EPS of $28.67 in 2015, rising to $35.89 in 2016 ($25.14 in 2014).
