August 24, 2019
Latest News

Alibaba's sales jump 42%, beating expectations

By Stu Woo

Beijing, Aug 15 (efe-epa).- Alibaba Group Holding Ltd. on Thursday reported a 42% increase in sales and more than doubled its profit in the quarter ended June 30, beating estimates and showing that the Chinese e-commerce giant is continuing to boom despite a saturated market and economy weakening amid the U.S.-China trade conflict, according to a report from Dow Jones Newswires supplied to Efe.

The quarterly report, the last before billionaire founder Jack Ma steps down as chairman next month, indicates that his successor, current Chief Executive Daniel Zhang, can continue the company's current strategy of focusing on boosting sales in China's rural areas while also investing in relatively nascent businesses, such as cloud computing, and international expansion.

Alibaba also announced a share-repurchase program of up to $6 billion over two years. The company's stock rose 3% in pre-market trading.

"This definitely marks a good ending of his role as the chairman and also signals a very smooth transition," said Bernstein analyst David Dai. "This should give investors more confidence in a post-Jack Ma era."

Alibaba's sales grew to 114.9 billion yuan ($16.3 billion) in the quarter ended June 30, up 42% from a year earlier. The vast majority of its revenue came from its core e-commerce business, where sales grew to 99.5 billion yuan in the quarter, up 44% from a year earlier.

Alibaba is China's dominant online retailer, with about a two-thirds market share. Having largely saturated the giant and relatively affluent cities including Beijing and Shanghai, the company is focusing on the growing middle class in less-developed areas. It said 70% of new customers in the quarter came from less-developed areas.

Alibaba is also quickly growing in China's nascent cloud-computing industry, the business of running systems for other companies. Alibaba said cloud-computing sales in the quarter grew 66% from a year earlier to 7.8 billion yuan.

The robust spending by both consumers and businesses suggest that the Chinese economy remains resilient even amid other signs of weakening, analysts said.

Alibaba Executive Vice President Joseph Tsai, who is close to making a record-breaking purchase to become majority owner of the National Basketball Association's Brooklyn Nets, said the company's cloud business is poised to benefit from superfast 5G, or fifth-generation, mobile networks that will become widely available in a couple of years.

Such 5G networks will enable what is known as the Internet of Things, where billions of sensors in street lights, farm soil and everyday objects, such as microwave ovens and sneakers, will be internet-connected.

Mr. Tsai said Alibaba's cloud business could sell services that let businesses cleanse, analyze and store the gobs of data collected from such sensors. "It'll ultimately benefit our cloud business," he said.

Alibaba's quarterly net profit more than doubled to 21.2 billion yuan, largely because of an exceptional charge related to compensation that increased expenses in the year-earlier quarter, added the Dow Jones report. EFE-EPA

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