So if you’re a news nerd like I am, you caught Alphabet’s (formerly known as Google) rise to glory last week. It is now the most valuable company in the world, a title once held by heavyweights Apple and Exxon Mobile. You also understand that the reason Google rebranded the holding company Alphabet was so that it might distinguish the research it is doing in other industries from the search engine itself. Score one for the branding wonks who serve Google. There is so much going on at Alphabet that the trademark “Google” fails to describe, that it made sense to create white space between the search engine, mapping, data analytics, Android OS, autonomous vehicles, and its other businesses.
Wall Street analysts can better value Alphabet because the results from the search engine Google stand separate from the other initiatives, specifically the autonomous vehicle research which no doubt is still consuming cash.
A company’s value accounts for all of its parts (notice I did not use the word sum). It is possible to have one division of a company’s capital worth discounted by another division’s misfortunes. Altria, formerly known as Phillip Morris, is a case study for the separation of segments to optimize the market-cap value. So it’s curious that Alphabet is being valued more by investors than it was as Google. It appears that the investor community embraces some of the cash consuming ventures in Alphabet’s portfolio.
Google is a heavyweight in research designed to capture or own the “smart-dashboard” which ultimately will serve as the operating system for vehicles of the future. Anyone who owns a newer car, truck, or SUV has a sense of how muddled its controls are. Driver settings are accessed through both the radio and the dashboard. There are many settings only accessible through the vehicle’s onboard diagnostics (OBD) port. It’s a puzzle that requires the humans to figure out while the vehicle is at a complete standstill. Alphabet sees opportunities. They’re not the only ones. Microsoft, Apple, Daimler Chrysler, Delphi, Peloton Technology, Nvidia, AutoTalks, and dozens of others are all in a quest to own a piece of the puzzle, if not the whole thing.
While ordinary people think it fantastic – the idea of a self-driving vehicle, there are many who say it’s worth the investment. Technology firms in this part of their evolutionary curve (AKA bleeding edge) often court venture capitalists, for the funding they need to get to market. That said the market captains in this space are well known and don’t throw shareholder money around lightly. What’s going on that has the mainstream market capitalists’ attention? We want to know what you think.