Alphabet Inc. Focused on Creating Long-Term Value
January 21 2016 - 6:40AM
Dow Jones News
DAVOS, Switzerland—Google parent Alphabet Inc. is focusing on
creating long-term value rather than on incremental results, the
company's chief financial officer said Thursday, adding strong
internal controls and infrastructure that improves visibility are
fundamental in today's tumultuous global markets.
Ruth Porat, who joined the Silicon Valley giant as CFO last May
from Morgan Stanley, said that the $480-billion company sees itself
as in the early stages of a revolution in how people use devices
and interact in a connected world. The result: she has spent the
2016 focused on long-term capital allocation for the company's
collection of businesses, from health care to self-driving cars,
that it internally calls "bets."
"If we're not constantly pushing the frontier, we are not
creating value for the long term," Ms. Porat said during The Wall
Street Journal's CFO Breakfast at the World Economic Forum in Davos
on Thursday. "If you're not disrupting your own business, somebody
else will disrupt your business."
Ms. Porat, who was involved in advising Fannie Mae and Freddie
Mac during the 2008 financial crisis, also said that she has taken
a lesson from those times with her to the West Coast: Companies
must build infrastructure that allows them to see what is going on
throughout their businesses.
"You would not get into a car and drive 100 miles an hour with
mud on your windshield," Ms. Porat said. "That is the lesson,
particularly in businesses moving as rapidly as tech."
Ms. Porat's comments underscore her role in adding clarity to
the former Google, melding experience from the banking world with
the resources and vision of Silicon Valley, since joining the
company some eight months ago. Shareholders have cheered the firm's
push for more transparency, with the stock rising sharply since its
decision to turn itself into a holding company that includes former
namesake Google as well as other firms.
Ms. Porat said Thursday that she believed that the different
units of Alphabet nevertheless belong together, because they can
share resources, computing power and capital. She also said she
doesn't expect to see Google's video site YouTube separated from
Google to become its own "bet" within Alphabet.
"Our view is that there's a really strong interrelationship
between all these businesses. They all benefit from one core
infrastructure," she said.
On stage Thursday, Ms. Porat was also joined by Hugh Johnston,
PepsiCo Inc.'s CFO, who said that his company also focuses on
disruptive business ideas over the long term, despite being in the
business of selling beverages and snacks.
Among PepsiCo's bets is investing in direct to consumer
e-commerce in China. Another idea: personalized drinks based on
information gleaned from a consumer's own sweat.
"I can design a Gatorade that's perfect for you," Mr. Johnston
said. "I think lots more of our products will be much more
personalized than before."
Write to Sam Schechner at sam.schechner@wsj.com
(END) Dow Jones Newswires
January 21, 2016 06:25 ET (11:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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