Alibaba Buys Stake in Indonesian Online Retailer, Extends Global Reach

By Liza Lin Features Dow Jones Newswires

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.

Continue Reading Below

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 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, 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.

Continue Reading Below

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 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

(END) Dow Jones Newswires

August 17, 2017 12:26 ET (16:26 GMT)