Alibaba Group Holding Ltd (阿里巴巴) shares yesterday fell the most in 18 months and cut its market valuation by about US$30 billion after investments in brick-and-mortar assets and digital media squeezed profit margins in the quarter ended in December last year.
The Chinese e-commerce giant reported revenue that topped analyst estimates and raised its growth forecast for the 12 months ending next month to 55 percent to 56 percent.
However, operating margin shrank to 31 percent last quarter, compared with 39 percent a year earlier.
Shares fell 5.9 percent in New York trading, the sharpest decline since June 2016.
Alibaba is also to buy 33 percent of Ant Financial Services Group (螞蟻金服), helping to clear the way for an initial public offering of the Chinese payments giant. While no cash is changing hands, Ant Financial would end royalty payments to Alibaba that were worth more than US$300 million last fiscal year.
Ant Financial has had a string of recent setbacks, with its US expansion thwarted by the collapse of a deal for MoneyGram International Inc while its Chinese business faces greater scrutiny from regulators and increased competition from Tencent Holdings Ltd (騰訊).
Formally known as Zhejiang Ant Small & Micro Financial Services Group Co (浙江螞蟻小微金融服務集團), Ant Financial operates Alipay (支付寶), as well as money market funds and credit scoring. It is based in Hangzhou, China, the same hometown as Alibaba.
Once dominant in China, Alipay’s share of online payments in the country has slumped to 54 percent as of the end of September last year amid the rise of Tencent’s WeChat (微信) platform, research firm Analysys International said.
Alibaba chief financial officer Maggie Wu (武衛) said on a conference call that investors should not equate lower margins with lower profits, as the overall business is growing.
“We are making the pie much bigger; 60 percent of an apple compared with 40 percent of a watermelon, which one do you want?” she said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts