Update: Since originally writing this post, Alibaba has put out a statement denying it is reducing graduate hiring, and says it has sent more than 1,400 job offer letters to graduating students for 2016 (Chinese article)
Bottom line: Alibaba’s reduction in its university recruiting program is an extension of a hiring freeze announced earlier this year, and is part of a much-needed effort to make its large headcount more efficient.
Alibaba trims campus recruitment
In what some may interpret as a sign of trouble, media are reporting that e-commerce leader Alibaba (NYSE: BABA) is sharply scaling back its recruitment of new college graduates. The interpretation of trouble is relatively obvious, since Alibaba has wooed investors with its breakneck growth story since its record IPO last year. Thus a sharp slowdown in hiring of young talent could signify a parallel slowdown in overall growth.
But the news shouldn’t come as a huge surprise, since Alibaba announced just 4 months ago that it would freeze its global headcount for the rest of the year. (previous post) That move was aimed at giving the company time to rationalize its huge workforce of 30,000, many of whom have joined as a result of Alibaba’s lightning growth that has included numerous acquisitions over the last 2 years. Read Full Post…
Bottom line: A plan by Alibaba’s chairman and vice chairman to borrow $2 billion using their company stock as collateral is a simple diversification move, and doesn’t represent any change in the company’s fundamentals or outlook.
Alibaba chairman, vice chairman eye $2 bln loan
Shares of e-commerce leader Alibaba (NYSE: BABA) have been buzzing these last few days since media reported that Chairman Jack Ma and one of the company’s other co-founders are preparing to diversify their company holdings that are worth billions of dollars. Neither Ma nor Vice Chairman Joe Tsai is planning an actual share sale, which would almost certainly undermine the company’s shaky stock. Instead, the pair are in talks to take out a $2 billion loan using their huge stash of Alibaba shares as collateral.
Alibaba’s shareholders didn’t seem to like the plan too much, and made their voices heard by trimming nearly 4 percent from the company’s share price after reports of the move surfaced late last week. The latest close means Alibaba stock now trades at a record low of $63.91, or about 6 percent below the $68 price for its record-breaking $25 billion IPO that will celebrate its one-year anniversary later this month. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 3-7. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Alibaba (NYSE: BABA) Chmn Said to Plan $2 Bln Loan Against Stock (English article)
Snackmaker Liwayway Said to Prepare $200 Mln Hong Kong IPO (English article)
Apple (Nasdaq: AAPL) Watch China Sales Pass 1.07 Mln – Report (Chinese article)
iQiyi, Shanghai New Culture (Shenzhen: 300336) in 1 Bln Yuan Production Tie-Up (Chinese article)
Xiaomi Accused of False Promotion Claims for Redmi Note 2 (Chinese article)
Bottom line: Alibaba’s new tie-up with a leading US wine maker is mostly symbolic and represents a boom in the e-commerce market for imported goods, while NetEase’s new share buyback plan is unlikely to provide much support for its sagging stock.
Robert Mondavi launches on Tmall
Leading Chinese Internet companies Alibaba (NYSE: BABA) and NetEase (Nasdaq: NTES) are trying different approaches to boost their sagging stocks, amid a broader sell-off for US-listed Chinese companies in tandem with China’s own tanking markets. The first case has e-commerce leader Alibaba launching a new online wine shop with US giant Robert Mondavi, as part of a broader move to let Chinese consumers buy imported goods online. The move by online game giant NetEase looks a bit more conventional, with its announcement of a plan to buy back up to $500 million of its stock.
Alibaba and NetEase certainly aren’t alone in watching their shares tumble, amid a broader sell-off for US-listed Chinese stocks over the last 2 months. Alibaba shares have lost nearly half of their value from their all-time high reached last November, and now trade about 5 percent below their IPO price from a year ago. NetEase shares have lost a quarter of their value since early August, in a plunge coinciding with China’s own tumbling stock markets. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 2. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
NetEase’s (Nasdaq: NTES) Board Approves $500 Mln Share Repurchase Program (PRNewswire)
Phoenix New Media (NYSE: FENG) to Cut Staff, Retrench – Memo (Chinese article)
Alibaba (NYSE: BABA) Launches “Tmall Vineyard Direct” With Robert Mondavi Wines (Businesswire)
AsiaInfo to Acquire Trend Micro Chinese Subsidiary (Businesswire)
Bottom line: New O2O take-out dining investments involving companies backed by Tencent and Alibaba reflects intensifying competition in the space, and is likely to result in a costly price war for market share.
Alibaba, Tencent in new take-out dining investments
The take-out dining space continues to heat up, with word of a major new funding for Ele.me, the service backed by social networking giant Tencent (HKEx: 700), and a big new investment for Koubei, the service owned by e-commerce leader Alibaba (NYSE: BABA). Both investments reflect a recent rush into online-to-offline (O2O) services by all 3 of China’s top Internet companies, as each tries to forge a hybridized mix of services that are likely to make up the retailing landscape of the future.
The larger of the 2 deals has Ele.me raising as much as $630 million in new funding, in a deal that brings in existing investors Tencent, along with its main e-commerce partner JD.com (Nasdaq: JD) and several other major private equity firms. The second has Koubei, Alibaba’s recently resurrected take-out dining site, investing a more modest 300 million yuan ($50 million) in a rival that operates the service called SHBJ.com. Read Full Post…
Bottom line: Qihoo and Meizu are likely to struggle with their new smartphone campaigns in India, where intensifying competition will also undermine domestic rivals like Xiaomi and Huawei that have recently entered the market.
Qihoo unveils new Qiku smartphones
Qihoo (NYSE: QIHU) and Meizu have announced they are taking their smartphones to India, becoming the latest Chinese brands to export to the fast-growing but increasingly competitive market. India is actually the second stop on Qihoo’s smartphone roadmap, which will begin in its home China market with the launch of the first 2 models of its new Qiku smartphone brand. Meizu has become a major second-tier player in its home China market over the last few years, and formally announced its own move into India this week as it looks to move overseas.
The pair will join several of China’s top smartphone makers in the increasingly crowded India market, which shares many qualities with China. Xiaomi launched in India last year and the market quickly became its second largest globally, while Huawei’s Honor brand has also scored rapid progress in the market. But Qihoo’s biggest competitor in India could be Coolpad (HKEx: 2369), which is already a big player in the market but will also produce Qihoo’s new smartphones through a joint venture formed by the pair last year. Read Full Post…
Bottom line: The recent sell-off for US-listed Chinese Internet stocks represents some panic selling but also a more realistic view of these companies by western investors, and could presage a modest rebound for their shares.
New investor realism towards China Internet stocks
After all the turmoil on China’s stock markets over the last 2 weeks, I thought it was finally time to take a closer look at what’s happened to shares of US-listed Chinese Internet companies and give my view on what’s happened and what might happen next. I was quite surprised when the selling frenzy in China over the last 2 weeks spread to US-listed Chinese shares, since names like Baidu (Nasdaq: BIDU) and Alibaba (NYSE: BABA) seemed like they were being punished even though they never benefited from the massive price gains seen by many of their Chinese peers over the last year.
But after moving in tandem with China’s stocks over the last 2 weeks, US-listed Chinese shares finally broke the cycle and posted strong gains on Tuesday, even as the main Shanghai index slid another 7.6 percent. Some will say that US investors were acting in response to a surprise interest rate cut by China’s central bank after Chinese markets closed on Tuesday, and that may be partly true. But I also believe that their selling over the last 2 weeks reflects a new realism by US investors about China’s growth prospects, and that investors have also woken up to the biggest truth that governs China’s stock markets. Read Full Post…
Bottom line: Premier Chinese Internet names should eschew China’s stock markets and continue to make IPOs in New York, where they can gain more accurate valuations and greater access to global capital markets.
NY offers best value for China Internet listings
Shares of e-commerce giant Alibaba (NYSE: BABA) achieved a dubious milestone late last week, when they officially closed at their lowest price since the company’s record-breaking IPO nearly a year ago. The big rise and subsequent fall of Alibaba’s stock was part of a broader sell-off of US-listed Chinese shares, sparked by an equally large drop on China’s domestic stock markets.
The US sell-off once again cast a spotlight on the question of whether some of China’s most promising private companies should pursue such offshore listings or make IPOs at home where their names are more familiar. Despite occasional volatility like last week’s sell-off, such offshore listings remain the best choice because they provide companies with relative stability and far more accurate valuations than what their peers are getting in China’s immature markets. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 20. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Bottom line: Huayi Bros could be moving towards an eventual goal of becoming China’s first major Hollywood-style studio through its massive new 30 billion yuan partnership with Ping An Bank.
HUayi goes to the movies with Ping An
It’s become quite common in China these days to see non-entertainment companies pour millions of dollars into entertainment-related ventures, most notably film-production deals. Everyone’s goal is to repeat the success of recent box office hits like “Monster Hunt”, which are earning big money by drawing on a fast-growing Chinese box office that could pass the US to become the world’s largest in the next decade.
But even I was surprised to see the size of the latest mega tie-up, which will see Ping An Bank pair with the highly successful independent movie producer Huayi Bros (Shenzhen: 300027) in a massive partnership with 30 billion yuan ($4.7 billion) in investment. That’s quite a large sum of money for the entertainment space, and is roughly comparable to how much e-commerce leader Alibaba (NYSE: BABA) said it would pay last week for 20 percent of retailing giant Suning (Shenzhen: 002024). Read Full Post…
