Alibaba Risks Burnout With News Frenzy
I have to commend Alibaba founder Jack Ma for his ability to keep his company in the headlines with growing frequency lately, as he seeks to build hype in the run-up to the e-commerce leader’s massive IPO. At the same time, however, Ma runs the very real risk of media burnout if his company continues to flood the market with this steady stream of news bits, even if many of them are truly newsworthy.
I’m making this observation after noting that I’ve written about various rumors, deals and other news about Alibaba with growing frequency in the last month. Those include news about a major infrastructure-building campaign, a new tie-up with security software specialist Qihoo 360 (NYSE: QIHU) and the company’s purchase of a controlling stake in online mapping company AutoNavi (Nasdaq: AMAP). Then of course there was Alibaba’s purchase of a $586 million stake in Sina’s (Nasdaq: SINA) Weibo microblogging site in April. And for every development I wrote about, there were probably 2 or 3 smaller news bits that I simply ignored just to keep the Alibaba news volume under control.
But that hasn’t stopped the steady news flow from continuing, with yet another 3 news bits in the media this week alone. One of those has Alibaba reportedly in talks to buy online video sharing site PPTV (English article); another is reporting that Alibaba has purchased a music streaming site called Xiami (English article; Chinese article); and the third has media reporting that Goldman Sachs (NYSE: GS) has joined a team of banks making an $8 billion loan to Alibaba, as it seeks to curry favor in hopes of being named as one of the investment banks for its IPO.
I was originally planning to skip all of these news bits, not because they’re not newsworthy but because I was starting to tire of seeing Alibaba’s name appear in the headlines so much. But then it occurred to me that if a China Internet junkie like me is tiring from this flood of Alibaba news, then the average reader has also probably began to feel inundated with this nonstop stream of stories.
This kind of saturation approach is quite typical of Ma, whose strong skills as a salesman are one of the main factors behind Alibaba’s success. I remember in the company’s early days how Ma never missed the opportunity to talk to any reporter who would listen to share his vision of how Alibaba was transforming China’s business landscape to empower small businessmen. While we reporters enjoyed Ma’s easy accessibility in the beginning, many of us ultimately tired of reporting on the company because of its overexposure in the news.
This latest flood of news seems to follow a similar pattern, aiming to create buzz around Alibaba as it readies for an IPO that’s likely to be the largest ever for a Chinese Internet company, perhaps raising up to $5-$6 billion. The only problem is that Alibaba doesn’t know exactly when it will make the offering, as it waits for the right window of positive investors sentiment to open.
Such an opening looks to be at least a few months away, meaning we’re unlikely to see an IPO until the end of this year at the very earliest. If the IPO were set for next month, I would say this recent news blitz looks quite smart as it will raise the company’s profile and generate buzz just when investors are buying shares. But at the current rate of news flow, it’s quite possible if Alibaba isn’t careful that investors and media could lose their interest by the time the IPO finally comes.
Bottom line: Alibaba runs the risk of media and investor burnout by the time it makes its blockbuster IPO if its sudden blitz of news stories continues.
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