Friday, January 30, 2015

Alibaba results surprise markets & Beijing criticises Alibaba for counterfeits

News this week: Yesterday, Alibaba Group announced its financial results for the quarter ended 31st December 2014. Revenues in the period were US$4.2 billion, a year-on-year 40% growth, but this missed the average analyst estimate of US$4.4 billion. In addition, net income dropped 28% to US$964 million, and diluted earnings per share were RMB 2.29 (US$0.37).

Revenues from the China commerce retail business in the three-month period were US$3.4 billion, up 32% year-on-year, due to growth in commission revenue and online marketing services revenue. Mobile revenues from the China commerce retail business grew surprisingly by 448%, amounting at US$1.04 billion, caused by a greater proportion of GMV generated on mobile devices and an increase in the mobile monetization rate.

Separately, on Wednesday, Beijing released a report criticising Alibaba for the number of counterfeit goods available on its e-commerce platforms. The State Administration of Industry and Commerce (SAIC) reportedly wrote the sternly worded report in July, but held back releasing the report until after Alibaba’s September IPO.

Alibaba’s stock dropped 8.8% to close at a three month low of US$89.81 on Thursday. The controversy may also have implications for Yahoo which announced this week it has plans to spin off its US$40 billion Alibaba shares into a new company – primarily to avoid paying taxes on the eventual sale of those shares.

This post is excerpted from BSG's weekly e-newsletter which is part of our subscription research service, BSG Tracker. Visit our website to find out more about this service. You can also follow us on Twitter for all the latest updates. 

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