Alibaba plunges on disappointing sales

Alibaba shares plunged Thursday as the Chinese e-commerce giant`s quarterly report showed weaker-than-expected sales growth.

Alibaba shares plunged Thursday as the Chinese e-commerce giant`s quarterly report showed weaker-than-expected sales growth.

Alibaba shares closed down 8.8 percent at $89.77.

The online shopping platform posted a 40-percent jump in sales to $4.219 billion, but that missed the $4.45 billion in revenues that analysts were expecting.

Net profit for the three months ending December plunged 28 percent to $964 million, while earnings per share rose 13 percent to 81 cents.

"Alibaba performed very well this quarter, with revenue growing 40 percent year on year," chief financial officer Maggie Wu said in a statement.

"We continue to execute our focused growth strategy, and the fundamental strength of our business gives us the confidence to invest in new initiatives to add new users, improve engagement and customer experience, expand our products and services and drive long-term shareholder value."

But investors and analysts gave a less enthusiastic response.

Analyst Youssef Squali at Cantor Fitzgerald called the results "mixed" and added, "While we expect Alibaba to continue to dominate the rapidly growing Chinese e-commerce market for years to come, we believe that near-term predictability of growth and margins has deteriorated given the company`s continued transition to mobile and changes to its user experience."

China makes up by far its biggest market with sales of $3.429 billion, as Alibaba operates the country`s most popular online shopping platform Taobao.

Alibaba meanwhile hit back against "unfair" Chinese government allegations that it failed to crackdown on illegal transactions.

The State Administration for Industry & Commerce (SAIC), charged with maintaining market order in China, Wednesday accused Alibaba of allowing "illegal operations" to flourish on its online shopping websites and ordered the company`s executives to "overcome arrogance."

The sharp criticism came after a SAIC survey published last week on Taobao that found only about a third of products sampled to be genuine.

"We believe the flawed approach taken in the report and the tactic of releasing a so-called white paper specifically targeting us was so unfair that we felt compelled to take the extraordinary step of preparing a formal complaint to the SAIC," Alibaba Vice-Chairman Joe Tsai said Thursday.Headquartered in the eastern city of Hangzhou, Alibaba completed the world`s biggest IPO with its $25 billion listing on the New York Stock Exchange in September, making its founder Jack Ma China`s richest man overnight.

Ma, who started the company in 1999, last week told business and political elites gathered in Davos that he wants to take Alibaba beyond China and turn it into a global e-commerce platform serving two billion customers.

Alibaba now counts 334 million active buyers.

In November, Ma said he planned a "global version" of Taobao, allowing buyers and sellers in different countries to connect with each other.

Taobao`s foreign efforts to date have focused mainly on overseas Chinese communities but Alibaba has launched a US shopping website, 11 Main.

Although Alibaba is often described as the Chinese version of eBay, it bested the US platform more than a decade ago.

Its earnings also far surpass that of US e-commerce giant Amazon.

Alibaba has been investing in apps to attract users of mobile devices like smartphones.

Revenues generated from such mobile devices leapt five-fold (448 percent) to $1.035 billion for the third quarter, to make up 42 percent of total sales. This figure has been rising steadily, from 36 percent in the previous quarter and from 20 percent one a year ago.

Earlier this week, Yahoo, which owns a 15 percent share in Alibaba, announced a spinoff to create a separate investment group to hold that stake worth nearly $40 billion.

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