Alibaba Q4 net slips on weak global economy

HONG KONG: Alibaba.com, which could soon be taken private by its founder Jack Ma, posted a first profit decline in more than two years as a weak global economy hit the number of paying members for its services.

The company, which operates an ecommerce website linking Chinese businesses to overseas buyers, warned its financial performance and membership growth could be dented further as it shifts to a value-added-services model from a subscription-based service.

October-december net profit fell 6% to 385.95 million yuan (Us$61.3mil) from 410.4 million yuan a year earlier, roughly in line with forecasts from two analysts polled by Thomson Reuters. It was the first quarterly profit fall since the 2009 third quarter.

Quarterly revenue grew 9% to 1.66 billion yuan, including a 7.3% increase in revenue from its international marketplace, to 945.6 million yuan.

“The company is undergoing a business transition, and I think things will start to probably recover in 2013,” said Dick Wei, a Hong Kong-based analyst for J.P. Morgan.

Alibaba.com’s parent, Alibaba Group, had signed a Us$3bil loan giving it the money it needed to buy out the unit, sources told thomson reuters publication Basis Point on Monday.

Ma has been trying to buy back a large stake in Alibaba Group held by Yahoo Inc, but talks on a complex asset swap have been deadlocked.

Taking Alibaba.com into private ownership was not a prerequisite for any broader deal for Ma to buy back the Yahoo stake, sources with knowledge of the talks have said.

Alibaba.com’s paying members fell 2.8% in the fourth quarter to 765,363 as international buyers have become less active. – Reuters