Alibaba.com, Yahoo's Chinese affiliate, has proven it is not immune to the world economic slowdown. The e-commerce site reported earnings growth of 49 percent in the third quarter, after more than doubling its profits in the previous quarter.
Alibaba posted a net profit of 308.6 million yuan ($45.2 million)
in the three months ended September, vs. 207.3 million yuan a
year earlier. The company had posted a profit increase of 159 percent in the last quarter, when earnings were boosted by interest income from its wildly-successful IPO, led by Chairman Jack Ma (photo).
Alibaba connects importers and exporters of Chinese goods. Yahoo owns 39 percent of the company.
The company has ample cash and plans to buy up to $258 million of its own shares, which have lost more
than three-fifths of their value since they were listed last
November.
"We believe a buyback program is appropriate at this time,
and it demonstrates the directors' confidence in the fundamentals
of our business," Chief Executive Officer David Wei said in a
statement.
The stock has fallen about 83 percent so far this year,
underperforming the broader Hang Seng Index, which has
fallen 49.5 percent, amid concerns about its premium memberships
and the outlook for the global economy.
Alibaba.com reported 398,351 paying members as of September 30, 2008,
representing a 46% increase from the third quarter of 2007 and an 8% increase
from the second quarter of 2008.
Last week
the company launched a new entry-level membership package, slashing its lowest
price by 60% to 19,800 yuan ($2,901) from 50,000 yuan in an effort to
increase its customer base.
"We believe if we can increase our customers, we will increase our
revenue later and the process will take care of itself," Mr. Wei said.
While the global financial crisis is weighing on Alibaba,
Beijing's $586 billion stimulus package announced last weekend
could benefit the company since part of the package was aimed at increasing
lending to China's small and medium manufacturers.