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GOOG Stock: Alphabet Inc Faces Uncertainty as Fadell Leaves Nest

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Former Apple Inc. ( AAPL ) exec Tony Fadell, who founded the smart home company Nest six years ago, announced he was "leaving the Nest" late last week. This raises new concerns for Alphabet Inc ( GOOG , GOOGL ) stock owners.

GOOG Stock: Alphabet Inc Faces Uncertainty as Fadell Leaves Nest

Source: Nest

GOOG acquired Nest two years ago for $3.2 billion in 2014 , and it was one of the brightest stars in Alphabet's "Other Bets" division, which consists of a wide array of businesses the company has nurtured to diversify its revenue streams away from Google search.

As most Alphabet shareholders probably know, these "Other Bets" have brought in some revenue, but collectively haven't even flirted with profitability . In the fourth quarter, Alphabet's "moonshots" saw revenue jump 37% to $448 million, but operating losses jump 84% to $3.6 billion.

In comparison, Google segment sales totaled $21.2 billion and operating income of $6.8 billion. Seeing the star leader of one of Alphabet's most promising "Other Bets" leave isn't too encouraging.

GOOG Stock: Nest's Meaningful Role

Alphabet doesn't break down the financials of its "Other Bet" segments, but it's safe to say that Nest is one of the more significant components as far as revenue is concerned. That makes it pretty important for GOOG stock owners.

Some statistics we do know: Since Nest began shipping products in 2011, it has grown revenue by over 50% annually. Fadell cites "millions of people in more than 190 countries" that use Nest products, and went on to pat Nest on its back a little more in his public resignation announcement:

"In 2015 alone, we shipped four new hardware products and five significant App releases, and the Nest Learning Thermostat 3rd Gen reached the one million unit milestone in half the time as the previous generation! More than 18,000 developers are now building their own products and services on our platform, and more than 12,000 retail stores carry our thermostats, smoke & CO alarms and cameras."

Although Fadell has been roundly criticized for fomenting a high-intensity, high-pressure culture that caused some resignations and late product launches, Fadell has pushed back against those accusations, claiming that turnover rates at Nest were in line with rates across Silicon Valley.

Plus, GOOG stock owners should all recognize that 50%-plus revenue growth since 2011 is hardly something to knock. While Fadell's hard-driving personality may not sit well with some employees, it is reminiscent of the notoriously demanding attitude of Steve Jobs and even recent criticisms of the environment Amazon.com, Inc. ( AMZN ) CEO Jeff Bezos has created.

Both companies have been massive successes, and made investors piles of money. The good news for GOOG stock owners is that Fadell will be staying on at Alphabet in some capacity, namely as an advisor to the company and its CEO, Dr. Larry Page.

While I'm sure Marwan Farwaz, a former executive VP for Motorola Mobility, is a noble replacement, Fadell, who worked on the iPod and iPhone at Apple, has a legendary track record that GOOG investors will likely miss going forward.

As of this writing, John Divine was long AMZN stock. You can follow him on Twitter at@divinebizkidor email him at editor@investorplace.com.

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The post GOOG Stock: Alphabet Inc Faces Uncertainty as Fadell Leaves Nest appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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