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.
International sales rose 14 percent to 1.8 billion yuan, the company said.
Michael Evans, a former Goldman Sachs Group Inc partner, was named president in August to lead the company’s global push.
Revenue from cloud computing more than doubled to 649 million yuan, Alibaba said.
The company’s Alicloud unit has added data centers in the US and plans expansion in Europe to capture processing and storage demand from governments and companies.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
FACTORY SHIFT: While Taiwan produces most of the world’s AI servers, firms are under pressure to move manufacturing amid geopolitical tensions Lenovo Group Ltd (聯想) started building artificial intelligence (AI) servers in India’s south, the latest boon for the rapidly growing country’s push to become a high-tech powerhouse. The company yesterday said it has started making the large, powerful computers in Pondicherry, southeastern India, moving beyond products such as laptops and smartphones. The Chinese company would also build out its facilities in the Bangalore region, including a research lab with a focus on AI. Lenovo’s plans mark another win for Indian Prime Minister Narendra Modi, who tries to attract more technology investment into the country. While India’s tense relationship with China has suffered setbacks