The news that co-founders Larry Page and Sergey Brin have stepped down in their leadership roles for Google and its parent company Alphabet has been known for some time. They announced that longtime Google CEO Sundar Pichai will be replacing Page as CEO of Alphabet. Therefore, the dual role of CEO for Google and Alphabet will be taken over by Pichai.
Pichai Takes the Reigns
Pichai officially took the reins as CEO on December 3rd, but the announcement was a mere formality, with Page and Brin having stepped back from their leadership roles for a while. In fact, in a recent blog post, Page and Brin wrote, “It’s time to assume the role of proud parents—offering advice and love, but not daily nagging!”
It is obvious that there is mutual respect between the trio. Pichai released a statement that said he was “looking forward to continuing to work with Larry and Sergey in our new roles. Thanks to them, we have a timeless mission, enduring values, and a culture of collaboration and exploration.”
It seems as though the transition will continue to be a smooth one.
Who is Sundar Pichai?
Born in India in 1972, Sundar Pichai, in full Pichai Sundararajan, came from humble beginnings. His father, an electrical engineer at the British multinational GCE, ensured that his sons received a good education. After earning a degree in metallurgy in 1993, Pichai was awarded a scholarship to Stanford University where he earned an M.S. in engineering and then an M.B.A. from the Wharton School of the University of Pennsylvania.
In 2004, Pichai joined Google where he was directly involved in the development of Google Chrome. In a few short years, he was promoted to vice president of product development, then senior vice president, and finally product chief over Google and the Android smartphone operating system.
Pursued by other tech giants such as Twitter and Microsoft, Google managed to keep Pichai with large financial packages. In 2014, he helped negotiate Google’s acquisition of Nest Labs for $3.2 billion. Therefore, it came as no surprise that the following year Pichai was named CEO of Google and now Alphabet.
Wall Street Shows Its Excitement
Wall Street is abuzz with news about the helm change and the ticker shows it; Alphabet stock (ticker: GOOG) rose almost 4% since last week’s announcement and closed at a record $1,341 on Friday. Even though Alphabet stock is behind tech giants such as Apple, Microsoft, and Facebook, it is still about the S&P 500 and continues to show growth.
Alphabet in Firm Standing
With businesses such as YouTube, Gmail, Chrome, Maps, Waze, and Waymo under the helm of Alphabet, the company continues to generate quarterly revenue at a rapid pace. In fact, it is projected that Alphabet could sustain a $30 billion annually buyback of stock without putting a dent in its net cash position leaving the company in very good financial standing.
Paying a Dividend?
Giants such as Apple and Microsoft have 1% yields, so there is no reason that Alphabet can’t do the same, especially with their positive net cash position. Some experts suggest that providing a dividend pledge to shareholders would cement Alphabet as one of the top business conglomerates, giving Apple and Microsoft a run for their money.
Falling Profits
Although profits have fallen from the third quarter of 2016 to the first quarter of 2017, the explosion in costs is due to a 75% rise in new hires. Growing pains for companies like Google are normal, but experts state that Facebook manages margins above 40% and that Alphabet could achieve those same goals.
Alphabet has a diverse portfolio of businesses that seem to keep growing and growing. With a new CEO at the helm, the chance of it becoming one of the globe’s best stocks is a safe bet.
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