A Year Of Alphabet: Great For Google, Less So For Moonshots

Reorganizing itself under the umbrella company Alphabet has done wonders for Google but less so for a grab bag of eclectic projects ranging from robotic cars to internet-beaming balloons, which are suffering costly growing pains.

A year after Alphabet took shape, Google’s revenue growth has accelerated an unusual development for a company of its size. That success, however, also underscores Alphabet’s dependence on the fickle business of placing digital ads in core Google products like search, Gmail and YouTube video. As a result, it remains vulnerable to swings in marketing budgets and stiffening competition from another equally ambitious rival, Facebook.

Alphabet was supposed to speed the process of turning offshoot businesses into new technological jackpots. CEO Larry Page predicted that separating these smaller “moonshots” from the massive search-and- advertising business would spur innovation by fostering a more entrepreneurial atmosphere.

That hasn’t happened during Alphabet’s first year.

MAKING THE SHIFT

Until Page and fellow Google co-founder Sergey Brin created Alphabet (which turns 1 on Sunday), investors complained that Google was spending too much on high-risk efforts. New Chief Financial Officer Ruth Porat, who joined Google in mid-2015, responded by reining in expenses to keep them more in line with revenue growth.