Alibaba.com posts slowest quarterly growth in almost 2 years

Alibaba.com posts slowest quarterly growth in almost 2 years

Stock Market Predictions

SHANGHAI (Global Markets) - Alibaba.com, China's largest e-commerce firm, posted an 11.9 percent rise in quarterly net profit, its slowest growth in nearly two years, with the company raising concerns due to a weak trade outlook stemming from debt woes in Europe and the United States.

The third-quarter results missed analyst forecasts and were attributed to a weak macroeconomic climate that led to a slower pace of customer additions.

"They are focusing on the quality of suppliers and also improving the overall quality of products that they are offering, such as some of the newer services to help buyers to check the quality of products before they are shipped," said Dick Wei, an analyst with JPMorgan.

"If you look at customer growth, there are no new initiatives and growth is not that top priority at this point," Wei said. "Revenue will pick up again later in 2012 or 2013."

Alibaba Group, parent of Alibaba.com, has seen a series of protests and dissatisfaction from its clients and suppliers.

Earlier this year, a significant increase in fraudulent transactions had caused a management reshuffle in Alibaba.com and prompted the e-commerce firm, one of the best known Chinese internet names, to step up supervision of suppliers.

This week, hundreds of sellers from Taobao -- which focuses mainly on consumer-to-consumer transactions -- protested outside the firm's Hangzhou offices, calling for the abolition of the website's feedback system, local media said.

Alibaba.com operates an e-commerce website that links Chinese businesses looking to sell their goods to overseas buyers. Alibaba Group, founded by billionaire Jack Ma, is 40 percent owned by Yahoo Inc.

Alibaba.com's exposure to international markets makes its turnover sensitive to the performance of the world's major economies such as the United States and Europe.

"The third quarter of 2011 presented a picture filled with challenges arising from the weaknesses in the U.S. economy and the debt troubles in the euro zone, which have threatened to spin out of control," Alibaba.com said in a statement.

"We are more cautious about the global economic outlook and believe that it may have a prolonged impact on China's export sector," the group said.

Growth in China's factory output is likely to fall slightly to between 12 and 13 percent in 2012 due to weakening global demand, the industry ministry said on Thursday, but that level probably still implies a comfortable GDP growth rate of 8 to 9 percent next year.

Fears that China may be set for a sharp slowdown flared again on Wednesday after HSBC's flash PMI survey showed the factory sector shrank the most in 32 months in November on signs of domestic economic weakness.

"Despite the stress posed by the external environment, we will stay focused on upgrading our business model and building quality, trustworthy e-commerce platforms," Alibaba.com Chief Executive Jonathan Lu said in a statement.

SLOWING PACE

Net profit for July-September rose to 409.7 million yuan ($63 million) from 366.1 million a year earlier, below an average forecast of 432.23 million from three analysts polled by Thomson Global Markets I/B/E/S.

Revenue grew 10.6 percent to 1.6 billion yuan and revenue from its international marketplace rose 11.8 percent to 947.5 million.

Revenue from its China Gold Supplier membership package was up 11.5 percent at 918.6 million yuan, contributing 57.3 percent to total revenue. Value-added services formed 30 percent of China Gold Supplier revenue in the quarter.

The number of paying members rose 4.9 percent to 787,653 compared with the same period last year. Subscribers for its China Gold Supplier and Global Gold Supplier packages fell 1.3 percent and 24.8 percent, respectively.

The firm said the slowing pace of customer additions and renewals was expected because of Alibaba.com's recent initiatives to beef up the quality of its membership base and a price hike in the beginning of the year.

Alibaba.com said pressure on membership renewal may continue in the fourth quarter as a special one-time offer granted to existing members to renew at an old lower price expires.

Alibaba.com, which competes with Global Sources Ltd, said in September it may spin off and publicly list its internet application services provider HiChina.

Alibaba.com shares were up 2 percent before the results. They have lost about 36 percent this year, compared with a 22 percent fall in the broader Hang Seng Index.

($1 = 6.3590 Chinese yuan)

(Additional reporting by Twinnie Siu and Lee Chyen Yee in Hong Kong; Editing by Vinu Pilakkott and David Holmes)

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Alibaba.com boosted by private equity investment

Alibaba.com boosted by private equity investment

Stock Market Predictions

SHANGHAI (Global Markets) - Private equity firms looking to invest into Alibaba Group have relieved pressure on Chairman Jack Ma to stage a speedy IPO by allowing a way for employees to sell their shares to willing buyers.

Shares of Alibaba.com, the only listed unit of the group, bucked a selloff in the broader market to close 2.8 percent higher after three private equity firms said they were looking to buy shares in Alibaba Group.

Yunfeng Capital, Silver Lake and DST Global said on Thursday they will buy shares in China's largest e-commerce group by leading a tender offer for employee shareholders, option holders and certain other shareholders of Alibaba Group.

Yunfeng Capital was co-founded by Ma.

The transaction would give Alibaba an enterprise valuation of $32 billion, the tech blog AllThingsD said, adding the group would get a stake of just under 5 percent if the offer is fully subscribed.

"They (Alibaba employees) are anxious for some sort of IPO, so it's wise of Jack Ma to give these guys some liquidity," said Michael Clendenin, managing director of Shanghai-based technology consultancy RedTech Advisors.

"This doesn't add investment to Alibaba because Alibaba doesn't need it. It's just a swap that certainly takes pressure off IPO in the near term."

The move may also help Ma in his quest to buy back a portion of all of Yahoo Inc's stake in his company as Silver Lake was reportedly considering a bid for Yahoo.

"Silver Lake is looking at Yahoo as a buyout target so to be closer to Jack and really see what he's thinking makes a lot of sense. They may want to know what Jack be willing to pay for a part of Yahoo's stake in Alibaba," Clendenin said.

It was reported earlier this month that Silver Lake is considering a bid for Yahoo that would see Silver Lake sell of Yahoo's Asian assets.

Yahoo is worth about $17 billion, with much of that ascribed to its roughly 40 percent stake in Alibaba Group, and has had a tumultuous relationship with Ma under its former chief executive Carol Bartz.

Japanese technology company Softbank Corp also owns about 30 percent of Alibaba Group.

Ma said the latest move was aimed at increasing liquidity options for employees.

"This liquidity program will allow our people to focus on growing our business and continuing to create value," he said in a statement.

"We believe the high-quality investors making commitments to this important program share our mission and philosophy, and we welcome them as shareholders of the company."

Yahoo will not be selling shares in the offer, AllThingsD said.

Chinese sportswear maker Dongxiang Group will invest $100 million in Yunfeng Capital, while Chinese online game developer Giant Interactive will also invest $50 million into Yunfeng Capital.

Singapore-based investment firm Temasek, a shareholder in Alibaba Group, is also taking part in the offer.

Alibaba Group is also the parent company of Taobao Mall, Taobao and AliCloud.

Alibaba.com shares rose as much as nearly 7 percent on Friday before closing up 2.8 percent. The broader market fell 1.4 percent.

(Additional reporting by Denny Thomas and Farah Master in HONG KONG; Editing by Anshuman Daga)

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Yahoo battle with China's Alibaba intensifies

Yahoo battle with China's Alibaba intensifies

Stock Market Predictions

NEW YORK (Global Markets) - Yahoo Inc's battle with Alibaba Group intensified on Friday as they issued contradictory statements over the Chinese company's transfer of a major Internet asset to its chief executive.

Analysts said the handover of Alipay, an online e-commerce payment system similar to eBay Inc's PayPal, to Alibaba Chief Executive Jack Ma has reduced the value of Yahoo's 43 percent Alibaba stake. Alibaba also operates China's largest e-commerce company, Alibaba.com Ltd.

Yahoo said it had been blindsided by the deal, while Alibaba countered that Yahoo was aware of the transaction by virtue of having a board seat, now held by former Yahoo Chief Executive Jerry Yang, who is also a Yahoo director.

Shares of Yahoo have fallen as much as 14 percent since the company first disclosed the transfer in a regulatory filing after markets closed on Tuesday.

The feud underscores the tense relationship between Ma and Carol Bartz, Yahoo's chief executive since January 2009.

Bartz is under pressure to boost revenue and drive more visitors to Yahoo, which is losing ground to rivals including Google Inc and Facebook. The Alibaba stake is considered one of Yahoo's most valuable assets.

Both Bartz and Yahoo Chairman Roy Bostock are in the "hot seat," said Eric Jackson, managing member of the hedge fund Ironfire Capital, which owns Yahoo stock.

"At best it makes it look like Yahoo -- Jerry Yang especially -- has been out of the loop," he said. "The Yahoo board has to be looking into the mirror and saying: 'What do we need to change to make this right?'"

In afternoon trading, Yahoo shares were down 61 cents, or 3.6 percent, at $16.56, after earlier falling as much as 7 percent to $15.96. They had closed Tuesday at $18.55.

BATTLE OVER BASICS

Yahoo invested $1 billion in Alibaba in 2005, but Alibaba has made clear it wants to buy out Yahoo's stake.

"I just don't trust them," Ma told Forbes magazine in its April 11 edition.

Bartz told Global Markets in September she has no plans to sell.

Some analysts estimate that Yahoo's Asian assets, including a 35 percent stake in Yahoo Japan Corp, represent at least half the Sunnyvale, California-based company's market value.

Yahoo and Alibaba do not agree on when Alipay was transferred to Ma, or whether Alibaba's board knew about it.

Alibaba said the board was told in July 2009 that the transfer had occurred. Yahoo said the transfer happened in August 2010, giving Ma full ownership of Alipay, and Yahoo did not learn of it until March 31, 2011.

Japan's Softbank Corp also owns a stake in Alibaba. Four directors make up Alibaba's board, including Yang and Softbank founder Masayoshi Son.

"I find it impossible to believe, as a rational matter, that a board member from Yahoo could sit through a proceeding whereby a valuable asset was transferred to the Alibaba CEO, and not object," said Manning Warren, a corporate law professor at the University of Louisville.

In a statement on Friday, Alibaba spokesman John Spelich said directors were "told in a July 2009 board meeting that majority shareholding in Alipay had been transferred into Chinese ownership."

According to Alibaba, the move was necessary to comply with Chinese law, to ensure Alipay could continue operating.

Later Friday, Yahoo stood by its earlier statement that the Alipay deal occurred "without the knowledge or approval of the Alibaba Group board of directors or shareholders."

Yahoo said it is in "active and constructive" talks with Alibaba and Softbank "to preserve the integrity" of its stake.

"It's surprising you can have that sort of communication lapse," said Ken Sena, an Evercore Partners analyst.

David Einhorn's hedge fund Greenlight Capital last week took a "significant" stake in Yahoo, saying its Alibaba interest could ultimately be worth more than Yahoo is now.

LEGAL RAMIFICATIONS

Warren said Yahoo might try to sue Ma under Delaware law, saying Ma would have to show that his acquisition of a major asset from his own company had been conducted fairly.

Meanwhile, if in fact Yahoo had been in position to stop the Alipay transfer, Yahoo itself might be sued, said Mark Rifkin, a partner at Wolf, Haldenstein, Adler, Freeman & Herz.

"It could even give rise to a Yahoo shareholder claim against Alibaba," given the 43 percent stake, he added.

Disputes such as this could dampen U.S. investors' enthusiasm for companies based in China, Ironfire's Jackson said. "I definitely think it can spook people," he said.

(Additional reporting by Aditi Sharma in Bangalore; editing by John Wallace and Gerald E. McCormick)

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