An­a­lysts to watch Alibaba’s cloud, mo­bile

China Daily (USA) - - ACROSS AMERICA - By PAUL WELITZKIN in New York paulwelitzkin@chi­nadai­lyusa.com

Chi­nese e-com­merce gi­ant Alibaba Group Hold­ing LTD re­ports fis­cal sec­ond-quar­ter earn­ings on Wed­nes­day, and an­a­lysts will be look­ing for fur­ther signs of growth in the com­pany’s cloud com­put­ing di­vi­sion and its abil­ity in­crease profit from mo­bile users.

The Hangzhou, China, com­pany will re­lease re­sults for the pe­riod ended Sept 30 and an­a­lysts sur­veyed by S&P Cap­i­tal IQ are look­ing for earn­ings of about $1.04 bil­lion. That would be down from the $3.57 bil­lion in the year-ago pe­riod in which re­sults were aided by a one-time gain of $2.93 bil­lion from the reval­u­a­tion of a stake in Alibaba Health In­for­ma­tion Tech­nol­ogy.

An­a­lysts are fore­cast­ing rev­enue of about $5.1 bil­lion, up sharply from $3.49 bil­lion a year ago, ac­cord­ing to S&P Cap­i­tal.

“We ex­pect con­tin­ued strength in the core com­merce and cloud busi­nesses to drive top-line growth and nar­row­ing losses in the dig­i­tal me­dia busi­ness to par­tially off­set some mar­gin con­trac­tion from on­go­ing in­vest­ments,” an­a­lysts at Stifel, Ni­co­laus & Com­pany Inc wrote in a re­search note.

In­vestors will be closely ex­am­in­ing re­sults from the com­pany’s cloud com­put­ing unit (AliCloud), which has grown to more than 500,000 users, ac­cord­ing to The Wall Street Jour­nal. The com­pany has been pur­su­ing in­ter­na­tional cloud ex­pan­sion by open­ing new data cen­ters in Asia, the US and else­where.

“We ex­pect con­tin­ued mo­men­tum in cloud rev­enue growth of 120 per­cent y/y (year-over-year) against dif­fi­cult com­pares,” said the Stifel an­a­lysts. They are fore­cast­ing cloud rev­enue of $215 mil­lion in the quar­ter, up from $98 mil­lion in the 2015 pe­riod and $187 mil­lion in the first quar­ter.

In the Au­gust quar­ter, Alibaba’s mon­e­ti­za­tion rate, a mea­sure of how much it makes from sales on its plat­forms, was 2.79 per­cent, up from 2.33 per­cent a year ear­lier.

Alibaba’s re­sults have been buoyed by progress in mak­ing money off transactions on cell­phones and other mo­bile de­vices. Mo­bile monthly ac­tive users rose from 410 mil­lion in March to 427 mil­lion in June — or about 100 mil­lion more mo­bile users than the pop­u­la­tion of the US.

Alibaba and its ri­vals like JD.com are gear­ing up for Sin­gles Day on Nov 11, a ma­jor an­nual shop­ping spree in China. Last year, Alibaba topped its own record for sales on Sin­gles Day with 91.2 bil­lion yuan ($14.3 bil­lion), a 60 per­cent rise from 2014.

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