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Sole CEO means simpler business for Alphabet - analysts

Sole CEO means simpler business for Alphabet - analysts
FILE PHOTO: Google CEO Sundar Pichai speaks during signing ceremony committing Google to help expand information technology education at El Centro College in Dallas, Texas, U.S. October 3, 2019. REUTERS/Brandon Wade -
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Brandon Wade(Reuters)
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(Reuters) – Alphabet’s change of leadership should simplify the company’s unorthodox management structure under new boss Sunder Pichai without creating unwanted turbulence in strategy at one of Silicon Valley’s biggest names, Wall Street analysts said on Wednesday.

Pichai, who was already the chief executive officer of Google, replaces Larry Page who has been at the helm of the parent company since it was formed back in 2015 with the main aim of looking beyond the search giant’s advertising business.

The shakeup announced on Tuesday makes the India-born, 47-year-old the sole public face of the company that Page and Sergey Brin started in a garage over two decades ago.

Evercore ISI analyst Kevin Rippey said the change should consolidate power in a company which “(till now) had been characterized by a degree of fragmentation in organizational structure, if not strategic vision.”

Pichai takes charge during an unprecedented political and regulatory scrutiny hovering over the company and will have to decide on the future of a plethora of ambitious and cash-burning bets including driverless cars and helium balloons that provide solar-powered internet services in remote areas.

Graphic – Revenue growth of Google vs Other Bets: https://fingfx.thomsonreuters.com/gfx/editorcharts/ALPHABET-GOOGLE/0H001QXNG9SE/eikon.png

For interactive graphic, click https://tmsnrt.rs/38ej71M

Page and Brin, both 46, will remain directors of the parent company and still control it through their ownership of preferred shares. As of April, Page held 26.1% of Alphabet’s total voting power, Brin 25.25% and Pichai less than 1%.

King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco, said he expected decisions would be made faster with a single CEO.

“He can execute more effectively without having to worry about stepping on the toes of Page and Brin.”

Pichai, who has spent 15 years at Google, rose to prominence while leading the development of Google’s Chrome browser.

The company’s stock has risen 70% since Pichai became CEO of Google, the business that accounts for close to 99% of Alphabet’s total revenue.

Graphic – A look at Alphabet's stock performance since debut: https://tmsnrt.rs/2ONxCBS

For interactive graphic, click https://tmsnrt.rs/2OOkzjJ

“You see most of these companies over time need to transition from founders managing them to the next generation of professional managers,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“Certainly Sundar Pichai has a good reputation in the business.”

(Reporting by Aakash Jagadeesh Babu and Tanvi Mehta in Bengaluru; Additional reporting by Caroline Valetkevitch in New York and Noel Randewich in San Francisco; Writing by Sweta Singh; Editing by Bernard Orr and Arun Koyyur)

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