Jack Ma is used to having his way, but even the Chinese tech titan and founder of Alibaba Group couldn’t avoid the effects of Microsoft’s attempt to buy out Yahoo.
Three years ago, Ma negotiated a deal that gave him management control of Yahoo’s China operations, while the US internet company bought a 40% stake in Alibaba Group.
When Microsoft finally walked away from a Yahoo acquisition in May, shares in Alibaba.com, the Hong Kong-listed unit of Ma’s company, fell 6% in one day – their biggest fall since its US$1.5 billion share listing last November.
The drop coincided with the release the company’s stellar quarterly earnings report. First-quarter net profits more than doubled year-on-year to US$43 million from US$20 million. Revenue rose 53% to US$97 million from US$64 million.
There was more cause for cheer 10 days later when Alibaba Group announed a joint venture with Japan’s telecom giant Softbank to create an e-commerce platform to serve clients in Japan and China. The new entity, to be called Alibaba.com Japan, would be 65% owned by Softbank. Softbank would take over Alibaba’s existing Japanese-language website.
But growth comes at a cost. Citi analyst Jason Brueschke had downgraded Alibaba.com from “hold” to “sell” ahead of the earnings report. His rationale was that a sales-force restructuring earlier this year would lead to a drop in revenue.
Alibaba.com CEO David Wei said he was confident of posting satisfactory full-year results despite the downgrade and the staff restructuring.