Google Reorganization Isn't About Cutting Costs, Alphabet CFO Says

By Jack Nicas 

Alphabet Inc. Chief Financial Officer Ruth Porat said Google's recent reorganization into a holding company isn't about cutting costs.

"You can't cost-cut your way to greatness," Ms. Porat said Wednesday at a Vanity Fair technology conference in San Francisco. Google on Friday completed its reorganization into Alphabet. Ms. Porat said the move "is about ensuring we have the same very detailed, disciplined approach to looking at growth in expenses" as growth in revenue.

The reorganization also "is about revenue growth," she added. "We have been clear about that."

Ms. Porat's rare public comments help shed light on Alphabet executives' thinking behind one of the largest corporate reorganizations ever.

The arrival of Ms. Porat, the former CFO at Morgan Stanley, at Alphabet has helped boost the company's stock, in part because of investor confidence that she will bring more transparency and financial discipline to the company.

Ms. Porat said the reorganization was partly about that. "I feel investors are our partners and stakeholders in the company and I understand they're trying to build financial models," she said. "What I've tried to focus on in my prior life and here is helping them understand what we think."

The Wall Street Journal reported last month that Alphabet had begun holding briefings with Wall Street analysts.

Ms. Porat also said that Alphabet would allocate capital similarly as Google did. For years, Google has publicly said it seeks to invest 70% of its capital in the core search business, 20% into ancillary businesses like its cloud service, and 10% into so-called moonshots, like drone deliveries and self-driving cars. That policy "is key, too, for the Alphabet family as a whole," she said.

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(END) Dow Jones Newswires

October 07, 2015 19:05 ET (23:05 GMT)

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