Tech Shares

Latest News About Tech Companies

Jack Ma Does it Again

By

Jack Ma and His Partners Now Have the right to expand board

Alibaba IPO has gained media attention for a while now, and everyday the company moves close to its New York stock exchange debut date. The company has just amended its Securities and Exchange Commission filing, and the amendments include its estimated valuation which has swollen from at least $116 billion to about $130 billion now.  However, what has caught the eye of many stakeholders is the clause that gives Alibaba partnership the right to add two more board members.

Amended SEC listings aside, you must have heard an outcry about certain aspects of Alibaba Group Holding Ltd. Prior to this amendment, the company was structured such that Alibaba partnership, which is a group of 27 top executives and investors, including Jack Ma, would appoint at least four of the nine directors to the board. The amendment revealed on Friday in the U.S. regulatory filing  now brings the board members to 11.

The Chinese ecommerce giant is only a couple of weeks away to debut in the U.S. stock market. This debut is expected to trounce Facebook Inc.’s IPO as the largest technology IPO in history. It might as well go down in history as the largest initial public offer ever seen in the world.

Jack Ma and Partners

The economist published an article on July 13 claiming that Jack Ma had opted to list in the U.S. in place of Hong Kong, not because the former is superior, but because it accepts dual-share structures that tech entrepreneurs use to retail control in their co-founded companies.

Alibaba’s share structure has been questioned severally; however, nothing seems to happen. Instead, it is getting worse. The SEC listing amendment has handed total power to the company’s founder and chairman, and a small clique surrounding him. It is claimed that Hong Kong had refused to allow this structure, which gives control to only a small group of people in a company as big as Alibaba.

Ma, formerly an English teacher, founded Alibaba in his apartment back in 1999. Though he did not know match about writing codes, with the help of partners this company has since grown and diversified its products to include even financial investment. And while his contribution to this company is unmatched, and devotion unquestionable, the multifaceted governance structure employed by Ma and his partners is a serious concern to investors.

 

Alibaba IPO May not Spark as Expected

By

Country May be Alibaba IPO’s Greatest Hurdle

The stock markets await the grand entry of the Chinese ecommerce giant Alibaba Group Holdings Ltd, which is set to debut in the U.S. market perhaps in the second half of next month or later this year. However, a study by brokerage firm ConvergEx Group has revealed that most investors are tepid about acquiring stake in Jack Ma’s company.

Virtually every investor believes that the Chinese internet giant will definitely be a great buy, but not as many investors are committing to translate this statement into action. According to the survey, the success of the IPO will be determined by how the U.S. investors who have never subscribed to Chinese stocks will respond to the IPO. So what is the deal and why would it stand in the success of this IPO?

ConvergEx Group Survey about Alibaba IPO

Here is the summary of the survey:

Future Prospects of Alibaba

  • 64% see ABABA as a good long-term (3-5 yrs) investment.
  • 88% expects the stock to appreciate in value in the first month of its debut. 52% further believe the stock will gain at least 10% in that period. No one interviewed expected the price to stagnate, but 12% expected a decline in the first one month.

Investing in the Stock

  • Merely 43% are planning to buy ABABA when it begins trading.
  • Among the fund managers who hold Chinese stocks, 60% say they will buy the initial offering. 38% of fund managers who have never invested in Chinese stocks will also make their debut with ABABA.

While explaining the results of the survey, ConvergEx’s chief market strategist Nick Colas said that the tepid appetite for Alibaba stock, despite its obvious success, is not about the company, but rather about its country of origin.

It is obvious that the U.S. investors have their reasons against the Chinese stocks. So what has happened in the previous Chinese tech companies IPOs, and have the stocks fared well after their debuts?

Previous Debuts

According to Bloomberg data, the past 12 months has seen at least 16 Chinese companies go public in the U.S. stock markets. 12 of these companies operate internet related businesses. In average these companies have gained 44%. Here are a few examples:

Company Description IPO Month IPO value Gain/Loss
58.com Inc. (WUBA), Online classifieds October  $245.1 million 140%
Autohome Inc. (ATHM), Car information website December $132.94 million 110%
Weibo Corp Social media platform April $285.6 million 24%
JD.com Inc. Online retail site May $1.78 42%

 

While the IPO market in the U.S. is generally at its best since the 2000 dot-com bubble, the Chinese internet companies have rewarded their investors with better returns than their U.S. peers, thanks to increasing consumption of ecommerce services in the world’s populous country.

Conclusion

Recently there was a red flag raised concerning the corporate structures of Chinese companies that pose potential risks to the U.S. investors. Perhaps this could be the cause for investor apathy for Alibaba’s upcoming IPO.

It is wise to be cautious, but missing out on Alibaba could be highly regrettable. The company already came clearabout the VIE structures used to bypass the Chinese foreign ownership legislation. So there is hope that all will be well, and so don’t worry much about the aftermath of the Alibaba IPO.

It’s NYSE:BABA for Alibaba IPO

By

NYSE Outfox Nasdaq in Pursuit for BABA IPO

NYSE, NASDAQ, ALIBABA IPOChinese ecommerce giant Alibaba Group Holding Ltd has chosen the New York Stock Exchange (NYSE) over Nasdaq OMX Group Inc. for its initial public offer (IPO), and will lists its shares under the ticker symbol “BABA”.  The company revealed this in its amended filing on Thursday, setting another win for NYSE over Nasdaq.

Nasdaq is the home to a number of tech companies including Microsoft Corporation (NASDAQ: MSFT), Intel Corp (NASDAQ: INTC), Apple Inc. (NASDAQ: AAPL), Google (NASDAQ: GOOG) and Alibaba’s shareholder Yahoo! Inc. (NASDAQ: YHOO) However, NYSE is now emerging as the darling of many, having satisfactory handled LinkedIn Corp. (NYSE: LNKD), Pandora Media Inc. (NYSE:P) and Yelp Inc. (NYSE: YELP) debuts. According to data compiled by Bloomberg, by the year 2000 Nasdaq had hosted 243 tech companies’ debuts compared to NYSE’s five.

Why Alibaba Chose NYSE

The decision to list in the NYSE instead of Nasdaq stock market is probably as a result of how the latter handled Facebook Inc. ’s (NASDAQ:FB) IPO. Until now, Facebook IPO, which raised $16 billion 2 years ago, is the biggest ever Internet IPO. However, the social media’s offering was marred by investor confusion and trade delays that resulted in losses worth millions of dollars for brokerage firms.

Since Alibaba’s offering is going to be much bigger, the company cannot settle for anything less than an exchange that can assert control and avoid the headache and confusion that characterized the Facebook IPO.

NYSE Preying on Nasdaq’s Dented Image

The NYSE has benefited from Nasdaq’s dented reputation. Last year, Twitter Inc. (NYSE: TWTR) opted to list in the NYSE rather than Nasdaq, the de facto home of tech companies. Out of the 37 technology companies that IPOed last year, Nasdaq only managed to attract 15 compared to NYSE’s 22.  This year NYSE has already listed King Digital Entertainment Plc’s, Candy Crush-maker, and now Alibaba.

In one decade, dating from 2001, Nasdaq won 122 IPOs while NYSE registered merely 45. However, from 2012 January to the end of Q1 this year (March 31), the number of tech companies listing in the NYSE has eclipsed that at Nasdaq, with the two exchanges registering 45 and 35 respectively. Nevertheless, NYSE still trails Nasdaq in the amount of money raised from the IPOs during that period, which are $8.8 billion and $20.7 billion respectively, thanks to Facebook’s $16 billion offering at Nasdaq.

The only two available stock exchanges in the U.S. had been closely courting Alibaba after it had decided to shelve its Hong Kong stock market preference. NYSE lost leading web portal Sina (Nasdaq: SINA) and Chinese top search engine Baidu (Nasdaq:BIDU), but the exchanges have shared the spoils in 50-50 manner. All in all, Alibaba is a big catch for NYSE as far as high-tech companies with massive growth potential is concerned.

About Alibaba

Alibaba was founded in 1999 by a former English teacher turned tech- entrepreneur in Hangzhou, China.  The company, which turned profitable in 2002, has since grown to include a number of platforms including Taobao, Tmall, and a mobile payment platform, Alipay.  In 2005 Yahoo became the company’s largest single shareholder by acquiring 40% stake, but later in 2012, the internet pioneer cut this stake to about 24%. During the IPO, Yahoo is expected to further reduce this stake to almost 12%.

Alibaba’s business is better defined as a combination of Amazon and EBay. It filed for $1 billion IPO in May, though the value is eventually expected to be bigger.

VIE Structure of Alibaba Pose a Major Risk to Investors

By

VIE Structure is used by Chinese Internet Companies Seeking U.S. Investors for Legal Reasons

VIE, Structures, Baidu. AlibabaU.S. investors interested in the Alibaba IPO have been told to be aware of the risks associated with the legal structure of the Chinese ecommerce giant together with other Chinese internet firms.  A commission whose mandate is to advice Congress on U.S. – China trade and economic issues has warned that such investors face major risks terming the companies’ legal arrangement as complex and highly risky and could make the U.S. shareholders suffer huge losses.

The report issued on June 18 was in response to surge in number of Chinese internet firms seeking financing from the U.S. market. The report has put Alibaba in the bad light, given that the company has filed to be listed in the New York stock exchange as early as August this year. If successful, its IPO might go down in history as the largest ever.

The Structure in Question

The commission took issue with the variable-interest entity (VIE) used by Chinese companies to bypass Beijing’s restrictions on foreign ownership in a specified industries, including internet businesses.

The report focuses on a structure called a variable-interest entity, or VIE. Chinese companies seeking to sell shares on U.S. markets use the structure to circumvent Chinese government restrictions on foreign ownership of businesses in sensitive industries, including Internet-related businesses.

In China, foreigners are not allowed to own more than half of the equity interests in any telecommunication service provider, which also include internet businesses. So while sourcing for capital in the U.S., such businesses create VIE structures, but these structures may not hold any water in Chinese courts.

The VIE structures include complex legal contracts between a holding company that connects foreign investors to the Chinese firms. These holding companies are often based in tax friendly nations, e.g. Cayman Islands.

According to the report, the main purpose of VIEs is to trick the Chinese lawmakers into believing that the business in question is Chinese-owned, and at the same time make foreign investors believe the same business is foreign-owned. This is potentially illegal in China, and both claims leave the ownership of the company in question.

Yahoo’s Case

To support its case against VIEs, the independent agency highlights the dispute that ensured between Yahoo! (NASDAQ: YHOO) and Alibaba over Alipay.

In 2011 Jack Ma, Alibaba’s founder and chairman, secretly spin-off Alipay – a payment tool similar to PayPal – from the Chinese ecommerce giant without informing Yahoo!, the then largest shareholder in the foreign entity.

According to the report, Alibaba’s VIE gives Jack Ma another chance of stealing part of Alibaba as all decision-making authority has been consolidated with the company’s founders in China.

Investors haven’t seemed too concerned about VIEs. Several companies including Baidu and JD.com have so far have been winners for investors.

The report also mentions the already U.S. listed Chinese companies including

  • Chinese search engine firm, Baidu Inc.
  • Alibaba rival JD.Com Inc. (ADR) (NASDAQ:JD), which IPOed last month.

The agency has raised a red flag over allowing Chinese entities to own important licenses, leaving Chinese shareholders with more control than their foreign counterparts. In Alibaba’s case, Mr. Mr controls the company’s assets.

Conclusion

Though this is not the first time complains are being raised about VIEs, many investors tend to be more concerned about company’s financials and thus ignore the risk these structures pose. Nevertheless, investors agree that owning companies through VIEs is not as effective as direct ownership.

Alibaba ties Up with Multiple Multinationals

By

Alibaba Links up with Multiple Multinationals

Alibaba, Philips, AutoNaviAutoThe Chinese ecommerce giant Alibaba (ABABA) is forming partnership with multiple multinationals in preparation for its IPO. In the past couple of weeks, the company has announced major strategic partnerships, including one with Philips. Alibaba has been on a pre-IPO investment spree that has also seen it acquire 50% stake worth $192 million in Guangzhou Evergrande – a top Chinese soccer team.

Alibaba is expected to make its much-publicized debut in the New York stock market later this year.  The company has announced a couple of deals some of which includes $249 million investment in SingPost (Singapore’s national postal service), investment in Wasu Media, a partnership with leading German automaker Volkswagen (OTCQX:VLKAY), and acquiring AutoNavi (AMAP) online mapping division.  Other prior investments include Youku, Intime, Haier, ChinaVision Media and the list is endless. And while this will bring business integration challenges, it is seen as a smart strategy that would help it build international presence prior to its IPO.

Why these Deals are Important

Alibaba has made a couple of deals recently, but those standouts are its partnerships with Philips and Volkswagen.

Alibaba – Philips

The Philips deal will enable Jack Ma’s side to work with the Germans in together in the budding business of smart devices. Alibaba’s cloud computing unit will work with Philips to generate electronic devices that are able to be operated remotely over Alicloud, Alibaba’s cloud computing platform. Philips will also help Alibaba to analyze the big customer data to help the Chinese ecommerce leader understand the needs of its customers.

And while this partnership is much of a gamble as smart devices are still not common, it is a big step to the future and it is taking battle to Amazon.com Inc.’s (Nasdaq: AMZN), which has more advanced cloud computing services. Philips is an important partner to Alibaba, if the company is to dominate the global market as it has done back at home. Ecommerce services beyond the Chinese border require such dominant partners!

Aibaba – AutoNavi

AutoNavi is one of the leading online mapping companies in China. The company was acquired by Alibaba for around $1.6 billion. Prior to this, AutoNavi had a partnership with TomTom, the global GPS mapping leader, that together they will be providing Audi with in-car mapping services.

Audi is a luxury car made by one of China’s biggest car sellers, Volkswagen. Last year alone, Volkswagen sold about a half a million Audis in China, which rounds up to 20% sales growth. Despite the market slowdown, Volkswagen is still expecting a double digit sales growth in its Chinese market this year. Although both TomTom and AutoNavi provides mapping services, it is very likely that the latter will provide the mapping services for Audi’s models sold in China, such as A3.

The Alibaba’s link with Audi is not only good for business but also for global connections. The German automaker has the global presence and can boost Alibaba in its quest to create a global look. As we speak, the Jack Ma’s company is only dominant at home with over 80% stake in ecommerce and 60% in parcel delivery services.

Conclusion

Alibaba has conquered China and it is out now to do the same to the rest of the world. Although the company has received much hype, it is yet to make a global mark and this is why it has embarked on creating partnerships that could help it drop the domestic look for a more multinational one. Also since its domestic growth is beginning to slowdown due to both competition and maturing home market, there is every need for the company to create a global presence for new sources of revenues. Through partnerships as those aforementioned, Alibaba will eventually achieve its global expansion targets and rest with the likes of Amazon, eBay and Wal-mart (WMT).

 

 

 

 

Alibaba buys 10.35% Stake in SingPost

By

Alibaba Captures the Logistical Services in Southeast Asia

Alibaba, SingPostThe Chinese e-commerce giant, Alibaba (ABABA), has acquired 10.35% stake in Singapore’s national postal service, SingPost. The company has invested $249M, continuing its pre-IPO shopping spree. The acquired firm is a growing provider of delivery services in the Southeast Asia.

SingPost warehouse’ favourable tax deals must have been its greatest allure appeal to Alibaba. And now the two intend to form a logistics joint venture. Alibaba is planning to invest about $16 billion in its delivery and logistics network in China in the near future. Therefore this deal is inline with its planned penetration, and gives it a chance to explore the e-commerce opportunities in the Southeast Asia.

SingPost has now joined the long list of Alibaba investment as the Chinese giants prepares to list in the U.S. Alibaba’s other latest investments include ChinaVision Media, Haier, Intime, AutoNavi,  and  Wasu Media. The company has been exploring ways to continue its Chinese dominance as well as grow its international presence.

Alibaba and its China’s E-Commerce Market

Alibaba serves 302 million shoppers and controls 80% of this e-commerce market. Its Taobao site, often related to Amazon, receives an average of 100 million visits per day. According to its IPO filing, over 80% of its 2013 revenues were generated locally, with international trade accounting for merely 12%.

According to Alibaba’s IPO filing, it is the largest online and mobile commerce company by gross merchandise volume (GMV). Its three leading segments Taobao, Tmall and Juhuasuan, which contributes to 82.7% of its revenues, had a total GMV of $248m. This is from 8 million sellers and a whooping 231 million active buyers in 2013. The company has also been quick to tap mobile phone internet users.

Both Amazon & EBay

Alibaba is considered as an amalgamation of Amazon and EBay.  Nevertheless, the Chinese giant is both bigger than this combination given that the sales from just two of its portals, Taobao and Tmall, dwarf the combined annual sales of the two American blue chips. The company has seven large segments, which include:

  1. Taobao – an equivalent of Amazon.
  2. Tmall – Similar to Ebay
  3. 1688 – A Chinese online wholesale marketplace for domestic trades among small businesses.
  4. Alibaba – China’s largest global online wholesale marketplace
  5. Ali Express – An online retail marketplace for international consumers and Chinese exporters
  6. Juhuasuan – Online group buying marketplace
  7. Aliyun – Cloud computing platform

The company also has a PayPal-like payment platform, Alipay. However, the platform will not be part of the much anticipated IPO.

Growth Prospects

Alibaba is experiencing phenomenal growth. As shown by its IPO filing, the company’s gross profit for the last 3 quarters of the FY 2013 was 17.25% higher than the gross profit of the full FY 2012. In the same period, its net income doubled.

China has 618 million internet users, but this represent merely 45.8% penetration rate. This number, 618 million, is 25% more than European Union population and double the entire size of U.S. population. Interestingly, penetration rate in both EU and the US is very high. In the U.S. is above 80%, meaning that there is still a great growth potential for China’s ecommerce market that translates to more clients for Alibaba.

Currently majority of Alibaba’s revenues are generated locally. However, its international commerce can benefit from the low production costs in China if the company utilizes its Taobao platform to exploit the overseas market.

Tech Stocks Banks on Successful JD.com IPO

By

Successful JD.com IPO, Good News for Alibaba and Foreign Tech Stocks

For some time now, there has been investor apathy when foreign stocks, especially Chinese tech stocks, are listed in the U.S. and other world stock markets. Just a few weeks ago, pork producer WH group, called off its expected Hong Kong IPO worth $5.3 billion citing lack of interest. But the atmosphere seemed to have changed looking at the latest debutant in the U.S. stock markets, JD.com.

The Chinese online retailer JD.com Inc., which is similar to Amazon, sold $93.7 million America Depository shares on Wednesday. Analysts expected the online retailer to fetch merely $16 to $18 per share, but the stock was able to sell at $19 apiece raising $1.8 billion in total.

This is good news for foreign companies that have their U.S. IPOs in the pipeline. Alibaba Group Holdings Ltd, which is waiting to IPO maybe in August, is banking on this sharp change of attitude towards Chinese stocks.  The Chinese e-commerce giant has filed for stock listing in the NYSE and it is expected to attract a huge number of investors.

Comparing JD.com and Alibaba

JD.com is not as attractive as Alibaba is in terms of both profitability and growth. However, most investors did not bother much and in fact, JD.com received a strong oversubscription. Analysts are arguing that this was due to the growth prospects of the Chinese e-commerce market, and also due to the company’s link with Tencent Holdings Ltd., a social media and gaming company.

JD.com is not yet profitable. It operates a business model similar to Amazon.com Inc. (Nasdaq: AMZN), that is, it stocks the products it sells. This follows that the company has to invest in warehouse and logistics.

Alibaba, jd.com, IPO, e-commerce

Alibaba Offices

Alibaba has perfected being third party between party trades. It does not necessarily need to stock the items it sells since it is more of a market place. The Chinese ecommerce giant has 14 strategic delivery partners with at least 1,700 delivery centres.

In relation JD.com owns its logistics empire, which it has been building for not less than five years. However, the latest Nasdaq debutant has fewer delivery centres (at least 1,620) than the Alibaba. Albeit its inferiority, it actually own and operates these points, which makes it able to offer same day delivery in at least 43 cities and next-day delivery in at least 256 cities in China. Alibaba often take an average of three days to deliver its products.

Conclusion

The heady evaluation of the relatively smaller JD.com hints that Alibaba may be valued as high as $200 billion as expected. This will rank higher than Facebook Inc. (NASDAQ: FB), which ranks as the second most valuable internet company after Google (NASDAQ: GOOG). Nevertheless, it is still premature to judge as each IPO is judged individually and there is no guarantee that Alibaba would be as successful as JD.com’s. All in all, observers and stakeholders are optimistic with the general outlook of the online Chinese retail market.

 

Alibaba IPO Puts Many Records on Notice

By

Alibaba IPO will Rank the Chinese Giant Second to Google!

alibaba ipo, alibaba, e-commerceAlibaba IPO news continues to intrigue investors, journalists and analysts alike. The Chinese e-commerce giant is expecting to list in the New York stock exchange later this year. According to its filing, the company was seeking to raise $1 billion. However, emerging news indicate that the company and its bankers are considering adding new shares to also raise funds for some of its shareholders.  This will make this company the second most valuable internet company, trailing only Google Inc. (Nasdaq: GOOGL).

With an approximately value of $168 billion (according to Bloomberg), the Hong-Kong based e-commerce company is looking to offload 12% of the stake through the IPO.

Alibaba IPO Valuation

Alibaba’s valuation puts it in the league of elite. The firm’s $168 billion market cap will dwarf Facebook Inc.’s (Nasdaq: FB) $148 billion, and will be $33 billion shy of the combined value of its two main rivals Amazon.com Inc. (Nasdaq: AMZN) andeBay Inc. (Nasdaq: EBAY). The two U.S.-based e-commerce companies are valued at $136 billion and $65 billion respectively.

However, Alibaba IPO valuation will still make it only a fraction of tech giantApple Inc. (Nasdaq:AAPL), which is valued at $508 billion, or Google valued at $356 billion.

History in the Making

The much awaited Alibaba IPO is slowly taking shape to be the greatest tech debut in history. Facebook still holds the record of the greatest tech company debut with its $16 billion offering.

Jack Ma’s firm, often inferred to be a combination of Amazon and eBay, will also to go into the records as the largest U.S. IPO ever if it smashes the $19.65 billion record set by Visa Inc. (NYSE:V) on March13, 2008.

Additional shares would mean that Alibaba IPO also could potentially overwhelm Agricultural Bank of China (ICBC) initial public offer as the largest ever. The latter raised $22.1 billion in Shanghai and Hong Kong stock markets.

Alibaba’s Business and Market

Alibaba, which controls about 76% of China’s mobile e-commerce market and 80% of the whole e-commerce market, basically operates an online shopping mall like Amazon, an online marketplace for consumer to consumer and business to business trades like eBay, a group buying platform called Juhuasuan, and an online payment platform similar to Paypal. Its gross sales from its top three sites totalled to $248 billion, with approximately 20% of this being initiated from mobile devices.

Alibaba’s Amazon version is known as Taobao while its eBay version is Tmall. The two platforms are very profitable such that in the year 2013, they contributed to 70% of all package deliveries made in China.  The Taobao platform has over 800 million product listings with over seven million sellers.

The company is set to acquire 18.5% stake in China’s YouTube, Youku Tudou. Last month it launched Yu Le Bao, a service for film investment that allows people to micro-invest in upcoming movies. This is addition to at least seven other acquisitions. Alibaba’s founder and executive chairman Jack Ma believe this expands the firm’s ecosystem by bringing in new products and services to their customers.

Conclusion

In China alone, Alibaba has a huge e-commerce market, but which is still growing. The e-commerce retail contributes to about 8% of the total retail business in China, and of all the internet users, only 49% are active online shoppers. This follows that Alibaba can still convert more internet users into frequent online shoppers.

While Alibaba IPO price and date are still not known, they are much at stake as investors, journalists and analysts await this IPO. It is expected to happen in the last quarter of this financial year. In the mealtime, all stakeholders are keeping their eyes and ears open.

Alibaba IPO filing Details Disappoint Expectations

By

Alibaba has released its much awaited Form F-1 filing as it begun its formal quest to become a publicly traded company in the U.S. stock market. In the form, the Chinese e-commerce giant is only seeking to raise $1 billion, a figure which completely differs with the much rumoured over $15 billion IPO.  And due to the filing review process, it is most certainly that the IPO will only be possible in the final quarter of 2014.

Alibaba Shows Off Big Figures

In the filing, no trading symbol was proposed but it is widely expected to use ABABA or ALIB. The company has also revealed its 2013 financial figures. The figures show that Alibaba made cumulated revenue of $5.55 billion, which is a 73% year to year revenue growth, with a Gross Margin of 71.9%. Its fourth quarter Gross Merchandise Volume rose with 53% on the on a year to year basis, and generally had an annual gross merchandise volume of $240 billion after taking 11.3 billion orders.

The company also acknowledged its clients appreciation of its mobile platform. The gross merchandise volume transacted on mobile platform rose from 7.4% a year earlier to 19.7% in Q4 2013.

According to the form, the company had a total of 231 million active buyers’ and 8 million active sellers’ accounts in the 2012 months ending December 31, 2013.

Alibaba’s three China retail marketplaces – Taobao, Tmall and Juhuasuan – accounted for 82.7% of its revenues over a period of nine months ending December 31, 2013. Over 60% of its total revenue ($4.69 billion) came from its market in China, while the international market accounted for $669 million (8.8%). Its cloud services contributed slightly over $105 million and the company also accrued $87 million in its other activities.

Alibaba Ownership

Internet pioneer Yahoo! owns 22.6% of Alibaba, second to SoftBank (SFTBF) which owns 34.4%. Alibaba founder Jack Ma owns 8.9 percent, meaning that if the company can withstand its valuation of $200 billion as previously estimated, he would be overwhelmingly rich. With a fortune of $18 billion, he would be perhaps the richest man in China.  However, the previous valuation was overly inflated, and the reasonable value of Alibaba may be $120 – $150 billion, though we can only wait for the IPO price to tell this.

What Investors Missed in the Released Details?

Investors who are interested in Alibaba when it finally makes debut in the stock market might have been a little bit disappointed with the revealed details. Most people would have been interested to know more details about its two leading e-commerce business Taobao and Tmall, and how they would possibly overwhelm Amazon and eBay. Also the company didn’t explore how it was planning to grow its struggling off-shore sales, which only contributed 8.8% of its 2013 revenues.

Verdict

Alibaba Form F-1 filings provide a clear insight of what investor should expect of this company. It is no doubt that ABABA will be an extraordinary and richly-valued stock. The IPO proceeds are expected to help the company expand its international presence to rival its peers in the industry. And since its international market is still under utilized and the China’s e-commerce market still growing, Alibaba’s rivals have every reason to worry.

Alibaba IPO Preparation: Patent Shopping

By

It is no news that the Chinese e-commerce giant, Alibaba, is preparing for debut in the U.S. stock market. The company will be floated in the New York stock market, in a date yet to be made public. No tech investor wants to miss. as it could be the world’s largest ever initial public offering. An IPO of such magnitude is expected to court many challenges and controversies, one of which is patent infringement.
[Read more…]