Alibaba upbeat on next quarter after profit falls 28pc
Alibaba Group Holding reported a 28 per cent year-on-year drop in net income for the quarter ended December yesterday, due to an increase in share-based compensation expenses and tax expenses.
Its shares fell 10 per cent in early trading in New York yesterday, extending a 4.4 per cent decline on Wednesday.
The mainland's largest e-commerce firm said net income in the quarter was 5.98 billion yuan (HK$7.41 billion), compared with 8.36 billion yuan in the same quarter a year earlier.
Revenue rose 40 per cent to 26.2 billion yuan.
Analysts polled by Bloomberg had expected net income to increase 6.8 per cent to 8.8 billion yuan.
Alibaba executive vice-chairman Joe Tsai said he was optimistic about the current quarter, with the Lunar New Year next month likely to see gross merchandise volume (GMV) continue to grow, "especially in low-tier cities".
Tang Jia, an analyst at research firm Analysys International, said the expenses that affected the company last quarter would continue to affect Alibaba this quarter.
"This is actually a problem all companies have to deal with after they float," Tang said.
She said the cost of strengthening Alibaba's presence on mobile devices was also high.
The Hangzhou-based company said annual active buyers increased 45 per cent year on year to 334 million last year.
Tang said the newly added active buyers and growth on mobile devices showed Alibaba was still on a healthy track.
"The non-GAAP net income, which is 13.1 billion yuan in the December quarter, is more accurate in telling the real business situation of Alibaba," she said.
Non-GAAP net income increased 25 per cent year on year, from 10.5 billion yuan in the same quarter in 2013.
A report by Bocom International forecast that Alibaba's share price would increase by more than 20 per cent within 12 months.
Alibaba has been in the spotlight over a dispute with the government, after the State Administration for Industry and Commerce criticised its customer-to-customer platform Taobao for selling fake goods.
Alibaba shares were trading at US$88.60 yesterday morning.
