Under the direction of new CFO Ruth Porat, Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) has made some interesting moves. This latest one came as a surprise to the market, not least because it's a novel move for the company. Oh, and it just so happens that it'll cost a cool $5 billion or so.

Listen to the entire podcast by clicking here. A full transcript follows the video.

 

Google made an announcement in their quarterly report. They're doing something they've never done before.

Lewis: Yeah. Something that we might not have seen coming. For all of the financial "tidying up" that they've done in the last couple months, I was never expecting them to initiate a buyback anytime soon.

O'Reilly: It's not huge. As I understand it, it's...

Lewis: Are you going to try to read the number?

O'Reilly: $5,099,019,513.59.

Lewis: That's a big $0.59.

O'Reilly: Dylan, what is the significance of this number?

Lewis: $5,099,019,514 is the square root of 26. Of course, there are 26 letters in the alphabet.

O'Reilly: Does that include transaction costs? I wonder.

Lewis: I don't know. Probably not. That's the headline here, right? "Does that include transaction costs?" More Google being kitschy and Google-y. They have to have fun. If they're going to be, like, "We're going to initiate a buyback, might as well...

O'Reilly: ...have some yucks." I was trying to extrapolate, like, "What other fun numbers could they do if they upped this?" Anyway, on that note, I don't want to pooh-pooh it, because it's fun that they're returning a portion of their $70+ billion in cash. This is not large; it's a $470 billion market-cap company, they have $70 billion in the bank. This is not a large buyback.

Lewis: In the context of their revenue that they just pulled in from the previous quarter, it's just over 25% of that.

O'Reilly: They had the standard thing that any company that initiates a buyback program puts out. The board of directors authorized Alphabet to repurchase. The repurchase is expected to be executed from time to time, subject to general business and market conditions. Subject to rule 105B-1. They're just going to do this if the stock pulls back at Christmas time. It's not, "Okay, in December we're going to spend $5 billion for assurance." This is a...

Lewis: This is going to be opportunistic.

O'Reilly: Yes. That's exactly it. It seems like it's not only not a big buyback, but it's being done because of the new CFO.

Lewis: Yeah. Like I eluded to earlier, one of the most noticeable differences in their corporate governance and how they've been approaching Wall Street recently. It's very visible that there's this new regime with CFO Ruth Porat. I don't know how heavily involved, or...

O'Reilly: Formerly of Morgan Stanley, as I recall.

Lewis: Yes. She has a background of being on the Street, and knowing how to cater to investors well. For a long time, I think Google has bucked the idea of being Wall Street friendly.

O'Reilly: Well, their IPO was done Dutch-Auction style, which is more investor friendly and not Wall Street/IPO/Fee friendly. They never split anything, which is -- Warren Buffett agrees with it, but Wall Street likes it because it's more shares, or whatever. The last thing I wanted to throw out about the buyback before we move on was the fact that the stock isn't necessarily expensive. It's trading at 26x forward earnings estimates from what I could find on S&P Capital IQ. On the other hand, it's being done at an all-time high. What's up, guys?

Lewis: They might recede a little bit post earnings, and we'll start to see them back down. Like you said, it is an opportunistic buy. It's not a scheduled buy. One of the things I thought was interesting is, they are not a stable, "All right, we're going to grow at 4% per year." Like a big tobacco type company where the business is stable and you know what cash flows are going to be and...

[crosstalk]

O'Reilly: You buy back stock. That's your job.

Lewis: Yeah. Usually, a lot of companies that are issuing dividends or have big buyback programs in place don't have a better use for their money. They can't internally use it to put it toward more lucrative projects. It's interesting to see Google...

O'Reilly: One would think that the ventures that these guys see in the Google Ventures division alone, I would think they could throw $5 billion at something.

Lewis: I think, maybe, the reality is just the scale that they've hit and the cash that they have available is so humongous that it doesn't hurt them.

O'Reilly: Same as Apple.

Lewis: It doesn't limit any of their business operations to shed this $5 billion and make Wall Street kind of happy.

Dylan Lewis has no position in any stocks mentioned. Sean O'Reilly has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.