Alibaba Buys Stake in Indonesian Online Retailer, Extends Global Reach
August 17 2017 - 12:41PM
Dow Jones News
By Liza Lin
Alibaba Group Holding Ltd. reported earnings for the fiscal
first quarter that again exceeded analysts expectations, with
surges in net income and revenue propelling the Chinese e-commerce
giant to new expansion plans.
Alibaba posted adjusted earnings per share of $1.17 for the
three months ended June, up 65% from a year ago. Quarterly revenue
rose 56% from the year-earlier period to $7.4 billion, beating
estimates of analysts surveyed by S&P Global Market
Intelligence.
Alibaba shares rallied toward a record high on heavy premarket
trading Thursday and were up about 4% in early New York trading,
topping Wednesday's record close of $159.50 a share. The stock has
gained more than 80% this year, compared with advances of more than
30% for Amazon.com Inc. and 10% for the S&P 500.
Alibaba, which operates Tmall and Taobao, China's two most
popular online-retail websites, commands as much as three-quarters
of all online retail sales in China and a trove of data on consumer
behavior. It has been expanding its product offerings and
leveraging its big-data assets to encourage consumers and
advertisers to spend more.
The efforts appear to be working: In Thursday's report, Alibaba
said sales from its core commerce division rose 58% to $6.3
billion, driven by growth in online sales. Different than
Amazon.com, Alibaba's Taobao e-commerce app has derived much of its
revenue from selling ads to online sellers. Alibaba has added video
and other entertainment to the app to keep shoppers in it as long
as possible.
Overall, for the fiscal first quarter ended June 30, Alibaba on
Thursday reported net income of $2.17 billion, up 94% from the year
before.
Revenue at Alibaba's digital-media and entertainment division
rose about a third to $602 million. Still, the unit, which includes
mobile browser UCWeb, Alibaba Pictures and video-streaming site
Youku Tudou, faces stiff competition in China's online video space,
with many players competing for licensed content.
Alibaba said last year it planned to invest more than 50 billion
yuan ($7.47 billion) over the next three years in media content and
infrastructure.
The company, founded by Chinese billionaire Jack Ma, reiterated
its strategy of going beyond traditional e-commerce to provide
logistics, payments, cloud and other services to online merchants
and physical-store retailers. And it has created its own
brick-and-mortar supermarket unit, Hema, where shoppers within a
certain radius can order online and have groceries delivered in 30
minutes.
Alibaba's cloud-computing arm, Alibaba Cloud, posted revenues of
$359 million as it enlarged its user base of paying customers. The
unit, which has been looking to grow its suite of services to
businesses and governments globally, in August signed an agreement
with the Macau city government to use its cloud technologies to
help with city management.
Investors in Alibaba shares shrugged off a warning from the
Zhejiang branch of the Cyberspace Administration of China, the
country's internet regulator. The regulator ordered five websites,
including Taobao, to remove vendors selling illegal virtual private
networks, or VPNs, which allow internet users to circumvent China's
firewall.
"Taobao forbids the listing or sale of any products that are
forbidden by applicable law," an Alibaba spokesperson said. "We
will continue to strive to ensure that third-party sellers comply
with applicable law and marketplace rules."
Alibaba will step up its investment in the second half of the
year to expand its market share in the business-to-consumer market,
Chief Financial Officer Maggie Wu said.
Alibaba plans to take part in a $1.1 billion investment in PT
Tokopedia, an Indonesian e-commerce marketplace that connects small
businesses with consumers, the Jakarta-based company said
Thursday.
Southeast Asia, a region of more than 600 million consumers, is
attracting investment from Chinese and U.S. tech firms as incomes
and smartphone penetration grow. The investment comes barely a
month after Amazon.com Inc. announced it would enter the region via
Singapore. And it follows Alibaba's $1 billion investment to raise
its stake in Southeast Asian online retailer Lazada.
Write to Liza Lin at Liza.Lin@wsj.com
(END) Dow Jones Newswires
August 17, 2017 12:26 ET (16:26 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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