Internet

Alibaba’s huge finance arm is a mystery to most

21 Nov 2014

It’s one of the Chinese e-commerce group’s crown jewels. Yet public investors don’t control it, and can’t reliably estimate its worth. Only select Alibaba executives see the affiliate’s inner workings. Since they own most of its shares, there is room for interests to diverge.

China great wall of content could be more than fad

20 Nov 2014

Smartphone maker Xiaomi and e-commerce giant Alibaba are stretching their business models by investing in online TV programming. If viewers pay up content might turn fickle ad revenues and one-off sales of hardware into predictable revenue streams.

China embraces troublesome cult of consumption

11 Nov 2014

E-commerce giant Alibaba shifted $2 billion of goods in the first hour of its “Singles’ Day” shopping festival. It looks like consumers are doing their bit to rebalance China’s economy. But like investment, consumption is a poor target. It can be wasteful as well as productive.

Alibaba delivers chunky growth, but at a cost

5 Nov 2014

The Chinese e-commerce giant pulled off a 54 pct revenue increase for the second quarter, its first results since listing in New York. But earnings slipped, only in part because of big IPO payouts to staff. Alibaba also says it targets sales, not margins. That’s not reassuring.

Tim Cook’s pride may expand corporate talent pool

30 Oct 2014

The Apple CEO’s decision to speak publicly about being gay should help advance the march toward acceptance. As boss of the world’s biggest company by market value, Cook could inspire others, giving C-suites and boardrooms more choice. They could use it.

Baidu must spend money to make money

30 Oct 2014

Mobile now accounts for half of its search traffic, but the Chinese search giant is grappling with how to turn users into revenue. Baidu has defied skeptics who thought it had missed the smartphone boom. But to deliver profit, it will need to keep sacrificing margins.

Online dating beginning to show signs of age

29 Oct 2014

Internet matchmaking has lost its stigma, almost doubling the number of users over five years. But if Zoosk plans to float and IAC spin off The Match Group, they had better hurry. Free services like Tinder and OkCupid are fast attracting singles, putting industry revenue at risk.

Facebook’s ambition only real threat to success

28 Oct 2014

The social network continues to crank out higher profit, as more users check accounts daily and advertisers get comfortable with the mobile platform. One possible danger, though, is that the company wastes capital on risky bets like artificial intelligence and virtual reality.

Sky-high valuations no match for earnings reality

28 Oct 2014

Investors knocked more than 10 pct, or well over $3 bln, off Twitter’s worth despite sales doubling. Blame the company’s overdone value multiples. Similar knocks to Amazon, Netflix, Pandora, Chipotle and Yelp show the danger when quarterly numbers can’t match a bullish story.

Rob Cox: Zuckerberg’s Chinese lessons are scalable

28 Oct 2014

Bilingual CEOs should be the norm, not fuel for the kind of media frenzy that greeted the Facebook founder’s Q&A in Mandarin last week. Learning a foreign language doesn’t just help conquer new markets. It fosters risk-taking and new thinking, and helps eliminate biases.

Google makes U.S. trade arbiter look patently daft

27 Oct 2014

The search giant says an International Trade Commission ban on imports of infringing items in digital form may disrupt the internet. Moreover, websites and cloud computing firms could become easier prey for patent trolls. It’s up to an appeals court to squelch ITC excesses.

Alibaba fund discovers downside to disruption

27 Oct 2014

The e-commerce group’s innovative money-market fund shrank in the third quarter. Yet the arbitrage that made it attractive is still there. One problem may be that Alibaba’s efforts have given investors a taste for alternatives to bank deposits, enticing rivals to pile in.

Zuckerberg’s Chinese chat leaves CEOs tongue-tied

24 Oct 2014

The Facebook founder surprised and delighted a Beijing audience by answering questions in Mandarin. His linguistic skills probably won’t make the social network any more welcome in the People’s Republic. But other corporate chiefs could learn from his efforts to friend China.

Amazon’s ambition outruns its cash flow

23 Oct 2014

The online retailer’s 20 pct sales growth in its third quarter was slower than expected, and its $437 mln loss was an ugly record. The firm’s voracious need for investment is a problem. CEO Jeff Bezos’ vision may be limitless, but his company’s ability to finance it is not.

LinkedIn can woo the censors to connect with China

18 Sep 2014

The job-focused social network is fine-tuning censorship policies for its Chinese site, which blocks sensitive posts in the PRC. It’s a contrast with other Western internet firms which have been more reluctant to oblige the censors. Unlike Google, LinkedIn can afford pragmatism.

Alibaba’s small IPO hike leaves room for believers

16 Sep 2014

Boosting the maximum share price by 3 pct won’t affect appetite for the Chinese e-commerce giant’s $21 bln-plus offering. Investors appear more focused on Alibaba’s growth prospects than on governance risks. That points to a warm reception when it starts trading later this week.   

Rakuten’s $1bln U.S. buy stretches loyalty logic

10 Sep 2014

Buying U.S. cash-back site Ebates will more than double overseas transaction volumes at Japan’s largest e-commerce firm. It underscores Rakuten’s plan to use its loyalty scheme to distinguish itself from rivals. Yet, as with past deals, it’s unclear how the parts fit together.

Calculator: Squaring Alibaba’s $155 bln valuation

8 Sep 2014

That’s the mid-point of the price range for the Chinese e-commerce giant’s upcoming IPO. The figure is bang in line with Breakingviews’ own estimate. Our interactive calculator spells out the key assumptions – and lets you flex the numbers to arrive at your own assessment.

Six steps to Alibaba’s twelve-figure valuation

2 Sep 2014

As the Chinese e-commerce giant launches its IPO, investors must decide what the shares are worth. Growth, profitability and stock market multiples are a factor. So are potential new businesses, though shaky governance merits a discount. Breakingviews spells out the key numbers.

China tech shows there’s value in being number two

1 Sep 2014

Chipping away at giants like Baidu and Alibaba means finding a niche. The rapid growth of JD, VIPShop, Qihoo, and YY shows there’s room for new models, and foreign investors are happy to fund them. But the line between healthy competition and profit-eroding rivalry is thin.