Alphabet, the new parent company of Google and all of its subsidiaries, wants those businesses to reign in corporate spending. That’s according to new reports from The Wall Street Journal published Tuesday (Nov. 24).
According to unnamed sources, Alphabet is putting the pressure on its subsidiaries – now called “bets” – to be held accountable for corporate spending on things like marketing and computing.
[bctt tweet=”Alphabet is holding its ‘bets’ accountable for corporate spending”]
Reports said the efforts are a part of Alphabet’s goal to become a conglomerate, holding names like Google Fiber and Google X. Until now, each subsidiary could manage its finances independently and spend as they would like for corporate services. Sources added that these subsidiaries will be encouraged to use Alphabet’s corporate services and will pay based on estimates of what they would have paid for third-party, non-Alphabet services.
As Alphabet prepares to reflect this metamorphosis in its financial statements next year, sources said it is looking to ensure these subsidiaries are more conservatively spending money.
Alphabet Chief Financial Officer Ruth Porat hinted to such moves in October during its earnings call. “After a period of big expense build-up, there was an appreciation that we needed to manage the cadence of spend,” she said. Reports added that Porat has focused on roping in corporate spending since she joined the firm in May.
The company posted better-than-expected figures at that October earnings report, helped by strong advertising sales and paid clicks. Managing expenses also helped secure quarterly success, the company said.
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