Alibaba.com Plans To Boost Spending
Alibaba.com Ltd., which operates an online merchandise-trading site for businesses, said fourth-quarter net profit fell 57%, partly because of a large one-time gain a year earlier.
But the Chinese company also said its paying membership grew sharply in the latest period and that it will continue with plans to invest in expanding its staff and overseas marketing despite narrowing profit margins.
Alibaba.com, the listed unit of Alibaba Group, which is 39%-owned by Yahoo Inc., said its net profit for the three months ended Dec. 31 fell to 199.4 million yuan ($29.2 million) from 465.3 million yuan in the same period a year earlier.
Revenue rose 27% to 805.9 million yuan from 634.6 million yuan.
Alibaba.com's site matches smaller manufacturers, mostly in China, with potential buyers around the world. It makes most of its money charging fees to the sellers for listings and related services.
The net-profit-figure comparison in the latest period was partly distorted by a hefty gain Alibaba.com booked in the fourth quarter of 2007 related to interest income from oversubscriptions to its initial public offering.
A company spokeswoman said that if the IPO-related gain in the year-earlier period were excluded, Alibaba.com's profit in the fourth quarter of 2008 would have increased 74%.
Still, Alibaba.com reported an operating-profit margin, which excludes gains or losses from financial income, of 22% in the fourth quarter, down from about 29% in the same quarter of 2007.
Alibaba.com cited higher staff and marketing costs, and Chief Executive David Wei told reporters he expects profit margins to fall further this year on additional investment in marketing and new employees. He didn't give a specific projection.
This year 'is a year of investment for Alibaba,' Mr. Wei said.
Despite slumping demand for Chinese exports, Alibaba.com said it had record gains in new members to its site in the third and fourth quarters.
The company plans to hire 2,000 to 3,000 new employees this year, which will raise staff costs by 25% to 30%, Mr. Wei said. The company is also beefing up spending on overseas marketing, including $30 million for the U.S.
'We still see the U.S. as the largest consumption power in the world,' Mr. Wei said.
Alibaba.com said its full-year net profit rose 25% in 2008 to 1.21 billion yuan from 967.8 million yuan in 2007. Excluding the IPO-related gains, its net profit would have jumped 95% last year, the company said. |
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