Wed, Oct 28, 2015 - Page 14 News List

Alibaba’s Q2 sales beat estimates on advertising

WEATHERING THE STORM:Sales rose 32% as the firm adjusted its payments for search terms and investors expect improvement as China’s stimulus takes effect

Bloomberg

Alibaba Group Holding Ltd’s (阿里巴巴) second-quarter revenue beat analysts’ estimates as China’s biggest online shopping company boosted advertising to fend off a slowing economy. Shares surged.

Sales rose 32 percent to 22.2 billion yuan (US$3.5 billion) in the three months ended last month, the company said yesterday.

That compares with the 21.3 billion yuan average of estimates compiled by Bloomberg.

Net income surged to 22.7 billion yuan after recognizing an accounting gain on an affiliate.

New cloud-based services for merchants and partnerships with retailers including electronics chain Suning Commerce Group Co (蘇寧電商集團) are helping boost ads and limit the impact of a slowing Chinese economy.

Increased promotions on Alibaba’s Tmall.com and Taobao Marketplace (淘寶) are driving sales ahead of next month’s Singles’ Day, the country’s biggest shopping event.

“Alibaba is tweaking its payments for search terms, which helped generate more money from advertisers,” Hong Kong-based Arete Research Services LLP analyst Li Muzhi said. “Investors are expecting things to improve at Alibaba as the economy in China improves with more stimulus policies.”

The profit result include a 18.6 billion yuan gain on its stake in Alibaba Health Information Technology Ltd (阿里健康).

Shares rose more than 8 percent in pre-market trading. The stock on Monday closed at US$76.35 in New York.

The stock has surged 29 percent so far this month and is on pace for its best month since last year’s initial public offering.

The company this month offered US$4.6 billion for the rest of Youku Tudou Inc (優酷土豆) to stream more video content to Chinese Internet users through control of the YouTube-like site.

Alibaba is investing more in online-to-offline services, or 020, in competition with rivals Tencent Holdings Ltd (騰訊) and Baidu Inc (百度). That includes investing in Didi Kuaidi (滴滴快的), China’s biggest taxi-hailing application, and backing the merger of group buying platforms Meituan.com and Dianping.com.

Even as China’s economy heads for its slowest growth in 25 years, billionaire chairman Jack Ma (馬雲) is pushing ahead with acquisitions.

The company has participated in almost US$15 billion of deals announced this year, about triple the number for all of last year, according to data compiled by Bloomberg.

Buying Youku is part of Alibaba’s plans to reach more of the 594 million Chinese who access the Internet from mobile devices and are hungry for online content.

Gross merchandise volume in China, Alibaba’s largest business, rose 28 percent to 713 billion yuan in the quarter.

Mobile revenue almost tripled to 10.5 billion yuan

“We are winning in mobile and remain focused on our top strategic priorities, including internationalization,” chief executive officer Daniel Zhang (張勇) said in the statement.

While mobile platforms help capture the millions of consumers shopping on smartphones and tablet computers, the smaller screens typically generate less advertising revenue.

Singles’ Day on Nov. 11 seeks to lure bargain shoppers, and the promotion last year had five times the sales of Cyber Monday in the US.

Alibaba also faces renewed pressure about selling counterfeits on its Web sites, with the American Apparel and Footwear Association requesting that Taobao Marketplace be put back on a US government “Notorious Market” list that shames intellectual property rights violators.

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