Google shares close 4.1% up on Alphabet restructuring

Google shares have risen by about 4.1% on Wall Street after investors welcomed news of its restructuring.

Under the change, which was announced on Monday, a new parent company will be created called Alphabet. The restructuring will see the separation of Google from the group's more speculative ventures.

Google co-founder Larry Page has said it will create a simpler structure for what had become a diverse group of businesses. It is hoped this will allow investors to see how profitable the core business is.

Subsidiaries such as Google X, which develops projects such as contact lenses, self-driving cars, internet weather-balloons and Google Glass will report separately from the core Google business.Some analysts predicted shares in the new holding company could rise from about $700 to well over $800.

Deutsche Bank put a target of $840 on the shares, with its head of internet and digital media equity research, Ross Sandler, saying: "There is significant upside from current levels".

Ralph Schackart, an analyst at William Blair, said: "We applaud Google's decision to increase transparency, a key investor concern."

Larry Page and Sergey Brin, who founded Google 18 years ago as students at Stanford University, will become chief executive and president of Alphabet respectively, while Sundar Pichai will head up Google.

 The new structure reflects the way many old economy corporations work, with a central unit acting as an umbrella to relatively independent business units focused on specific areas.

Ville Hellman, head of development at digital agency Rawnet, said: "Google has extended their operations to cover a lot of new fields for several years now, and some of the new fields it is entering are only very loosely related to their core business.

"Bearing this in mind, it makes sense for such a drastic restructure to ensure that the individual entities do not grow too large and sluggish to respond to the ever changing landscape."

bbc.com