Alibaba's revenue soars, but new ventures hit profit

Thu May 5, 2016 12:12pm EDT
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By Paul Carsten

(Reuters) - Alibaba Group Holding Ltd, China's biggest e-commerce company, said fourth-quarter sales rose 39 percent after its core online shopping business grew, but profit fell for the first time as it spent on ventures like food delivery.

Net income excluding extraordinary items, Alibaba's preferred measure for earnings, shrank 1.4 percent to 7.6 billion yuan from the previous year, as the company continued to invest heavily in new but shakier businesses.

Investors welcomed the higher-than-expected revenue, sending the firm's American Depository shares up 3.7 percent to $78.60 by 1435 GMT (9:35 a.m. ET).

"Whatever they are doing must be working, and most importantly it's a sign that the Chinese consumer may not be weakening quite yet," said Gil Luria of Wedbush Securities.

But, not all of Alibaba's businesses looked rosy.

Its online finance affiliate Ant Financial Services Group, one of founder Jack Ma's crown jewels in his e-commerce empire, recorded a net loss in the quarter.

That business has spent heavily on its intense competition with WeChat Payment, one of the world's largest payments systems and owned by Alibaba arch-rival Tencent Holdings Ltd.

Ant, which houses the massive Alipay online payment platform, is now valued at $60 billion and is gearing up for an IPO, despite the fact it is now losing money. Alibaba did not disclose how much Ant lost.   Continued...

A logo of Alibaba Group is seen on a building under construction, where the company's Beijing headquarters will be, in Beijing, China, October 15, 2015. REUTERS/Kim Kyung-Hoon/File photo