Despite beating earnings expectations, Alibaba stock slides after not meeting revenue outlook

World Today

Chinese e-commerce powerhouse Alibaba Group reported adjusted fourth-quarter earnings that beat expectations as its user base continued to grow and shoppers bought more on mobile phones.

Its revenue surged 40 percent during quarter that included the holiday season but analysts were expecting more. That sent shares down 8 percent in premarket trading.

The news comes as the company, which went public in September in the U.S. in the biggest IPO ever, is facing a critical report from Chinese regulators that it is failing to do enough to prevent fake goods from being sold on its websites. Alibaba said the report is unfair and it is preparing a formal complaint.

In the October to December quarter, net income fell 28 percent to 5.84 billion yuan ($957 million), or 37 cents per share, from 8.27 billion yuan a year ago. Excluding one-time stock option and other costs, earnings totaled 81 cents per share. That beat analyst expectations of 75 cents per share, according to a survey by FactSet.

But revenue during the crucial holiday quarter was disappointing. Although revenue climbed to 26.18 billion yuan ($4.22 billion) from 18.75 billion yuan, it fell short of expectations for $4.44 billion.

Despite the lower than expected revenues, company founder Jack Ma is pushing an ambitious plan to grow Alibaba’s customer base more than sixfold to two billion people, starting with expanding his e-commerce platform to small businesses around the world.

CCTV’s Cathy Yang reported this story from Hong Kong.

Amid Hong Kong’s bustling lunch crowd, Katy Cheung, 26, would tinker with her smartphone and quietly source clothes, bags, and accessories from Chinese mainland suppliers and sell them to friends and online shoppers in Hong Kong — and overseas, thanks to Alibaba’s online shopping mall Taobao. She’s is one of a hundred million daily buyers who at one point in time have used Alibaba.

The extra money was good, 5 percent on top of her monthly salary, but she’s had to give it up for now, due to time constraints at work.

“I tried to divvy up my time between selling online and keeping my day job, but it was just too difficult. But I do plan to sell again online at some point,” Cheung said.

At the World Economic Forum earlier this month, Alibaba founder Jack Ma revealed plans by getting more entrepreneurs such as Cheung on board and making money online for the long haul.

“If we can help a small business in Norway sell things to Argentina, and Argentina consumers can buy things online from Switzerland, we can build up an e-WTO,” Ma said.

To encourage more small and medium-sized enterprises to come on board and keep them engaged online, www.Alibaba.com has started up a search for outstanding online merchants in Hong Kong.

Ma’s grand vision is slowly taking root in Hong Kong, where entrepreneurial locals have started their own fledgling small and medium-sized businesses with the help of Alibaba’s platform.

This story is compiled with information from CCTV America and The Associated Press. 


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