Tuesday, December 15, 2009

UPDATE:Alibaba.com Confident Of Profit Growth In 2010

By Lorraine Luk
HONG KONG (Dow Jones)--Alibaba.com Ltd. (1688.HK) is confident it will see profit growth in 2010 as China continues to see an improvement in its economy.

Chief Executive David Wei told shareholders at a meeting in Hong Kong China's exports are expected to return to the robust levels seen in 2007 in the first quarter, which should help the company's business in the coming year.

Alibaba, which operates an online platform that connects buyers and suppliers, reported declines in net profit since the fourth quarter of last year because of higher marketing costs and increased spending on infrastructure and technology. For the three months ended Sept. 30, its net profit fell 20% to CNY236.0 million from CNY296.6 million a year earlier.

Wei said Alibaba.com continues to strengthen cooperation with affiliates in China. For example, Alibaba.com signed a cross-selling agreement with affiliates Taobao.com and Alipay, an online payment platform.

Wei said these connection transactions now only account for a single digit of the company's revenue but he hopes to increase the proportion in the future to help lower its operating costs.

Wei also said the online business-to-business platform operator is still in talks over a joint venture in India, and continues to explore a separate partnership in the U.S.

He added the company is also considering other acquisition opportunities globally.

Wei said Alibaba.com's investment strategy is driven by three principles: there must be no overlap in users, the investment must offer new commercial e-commerce opportunities, and introduce new technology.

Alibaba had declared 2009 to be 'a year of investment,' as it ramps up spending on marketing and research and development, and hires more staff. Alibaba Group is 39% owned by Yahoo Inc.

-By Lorraine Luk, Dow Jones Newswires; 852-2802-7002; lorraine.luk@dowjones.com


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