| 1 | By separating moonshots from moneymakers, Google founders Larry Page and Sergey Brin are now free to pursue more quixotic business ideas such as glucose-monitoring contact lenses, Internet-connected, high-altitude balloons and even immortality. |
| 2 | Investors cheered the corporate restructuring announced Monday for giving greater visibility into Google's central business and seemed less anxious about zany ventures that may pose as distractions. |
| 3 | But of all the businesses in Alphabet - the new holding company that isolates the core search and advertising business from riskier bets - popular smart home accessory maker Nest Labs is likely the only unit that will give investors the returns they crave anytime soon, analysts told Reuters. |
| 4 | They added that Google's self-driving cars and health ventures, such as storing data on human DNA in the cloud, are potentially profitable, but not for at least several years. |
| 5 | "In the near term, investors are going to focus on the core business and give them some leeway," said Macquarie Research analyst Ben Schachter. |
| 6 | The company's shares rose 4% Tuesday in the wake of the announcement and climbed as much as 7% the previous day in after-hours trading. |
| 7 | Under the structure - search, advertising, maps, YouTube and Android will remain part of Google under the leadership of new chief executive officer Sundar Pichai, currently the company's product chief. |
| 8 | Search remains the company's financial engine, driving more than 90% of revenue, according to analysts. |
| 9 | Nest, anti-aging company Calico, smart cities company Sidewalk, secretive lab Google X, as well as Google Capital and Google Ventures - two investing units - will all be run separately with their own leaders, Google said. |
| 10 | Through those ventures, Google has tried to accomplish everything from improving public transportation to prolonging the human lifespan. |
| 11 | Page and Brin will be Alphabet's CEO and president, respectively. |
| 12 | The company plans to combine the financial results of all ventures outside the core Google business, but investors hope that other firms' results will be broken out as they mature. |
| 13 | The prime candidate for such scrutiny is Nest, the maker of smart thermostats, smoke detectors and other security systems that Google bought last year for $3.2 billion. |
| 14 | Although Google has not detailed the company's financial performance, investors have reason to be optimistic, said analyst Avi Greengart of Current Analysis. |
| 15 | "There's a tremendous amount of design and engineering," that go into its products, he said. |
| 16 | "They are selling (them) at a profit." |
| 17 | Nest may benefit from more independence, said analyst Jan Dawson of Jackdaw Research. |
| 18 | The acquisition sparked concerns among consumers that Google would suck up data from Nest's home accessories or put advertising on the gadgets. |
| 19 | Now the relationship is "at arm's length again," said Dawson. |
| 20 | Analysts are optimistic that some of the other research projects will become profitable businesses. |
| 21 | Google has already begun testing its self-driving cars near its Mountain View, California headquarters as it figures out how to crack a potentially huge market, even as traditional auto makers also pursue the technology. |
| 22 | It has also recruited top researchers for its health ventures and will have the flexibility to spend years researching and testing products. |
| 23 | But the fledgling ventures will also be looked at more closely. |
| 24 | When investors see just how much money the projects are hemorrhaging, they may call for greater discipline, perhaps hampering development, said analyst Patrick Moorhead of Moor Insights & Strategy. |
| 25 | "Heck, Google itself lost money for years before it went public," he said. |
| 26 | Whether ventures thrive or flop, Dawson said, the new structure leaves Google poised for either course of action. |