Alibaba Expands Beyond E-Commerce

China's Alibaba Group, which is readying for a big U.S. initial public offering, is known as an e-commerce titan but it's been busily expanding into other rising industries. Here's a closer look at those businesses, which include cloud computing, mobile messaging, and investments in online video, social media as well as bricks and mortar retail and delivery networks.

—BUYING AND SELLING

Three retail e-commerce sites account for four-fifths of Alibaba's revenue. Taobao, which means "digging for treasure," is a cross between eBay and Amazon for China. Sellers pay nothing to list on Taobao, but Alibaba charges for advertising services. Tmall, which in Chinese is known as Tian Mao, or Sky Cat, is for brands selling directly to consumers while Juhuasuan is a group buying marketplace akin to Groupon. Last year these three sites had a combined 8 million sellers and 231 million buyers and handled 1.54 trillion yuan ($247 billion) worth of merchandise. Alibaba also operates three sites to connect manufacturers with buyers, which was its original mission. Alibaba.com is for sellers of industrial quantities of everything from underwear to cement to toilets and beyond. It has 117,000 paying members. AliExpress is for international consumers buying directly from Chinese wholesalers and suppliers while 1688.com, which has 690,000 members, is for the China market. Alibaba also bought a stake in U.S. online shopping site ShopRunner last year.

— CLOUD

Alibaba Cloud Computing launched in 2009 and now has more than 980,000 customers. The service, similar to Amazon Web Services, uses Alibaba infrastructure to provide services to Taobao and Tmall sellers as well as clients ranging from Internet gaming startups to companies in the financial services, healthcare and digital entertainment industries. Users are charged a fee based on time and usage. Alibaba has also developed a mobile operating system, Aliyun OS, aimed at challenging Google's Android, which it plans to integrate with its cloud services.

— PAYMENTS

Alipay, launched in 2004, is China's largest online third-party payment services provider, according to iResearch. It was also the source of one of Alibaba founder Jack Ma's biggest boardroom controversies. Ma transferred ownership of Alipay, which runs PayPal style services, in 2011 to a company he controlled to comply with Chinese government regulations but Alibaba shareholder Yahoo complained it wasn't fully informed. Alibaba said in its filing that "we continue to participate in some of the economic benefits of Alipay through contractual arrangements."

— MOBILE AND SOCIAL

Alibaba has developed a smartphone messaging app, Laiwang, to compete with Tencent Holding's WeChat, which is a wildly popular instant messaging service in China. To get the app off the ground when it launched in September, Ma encouraged employees to sign up 100 friends or relatives. The company also has stakes in several mobile Internet and social media companies, notably Weibo Corp., which operates a microblog site that is China's version of Twitter. Other investments include Chinese mobile Web browser developer UCWeb Inc. and U.S. messaging company TangoMe Inc. It acquired Beijing-based digital mapmaker and navigation service firm AutoNavi Holdings Ltd. this year, giving it control of another service to attract mobile users.

— DIGITAL MEDIA

Alibaba bought stakes this year in Internet TV site Youku Tudou Inc., TV and film producer ChinaVision Media Group Ltd. and cable TV firm Wasu Media Holding Co. The investments, combined with the launch last year of a smart TV set-top box, kickstart the company's digital entertainment strategy at a time when China's Internet companies are fiercely computing for smartphone, tablet and Web TV users — and their advertising revenue.

— BRICKS AND MORTAR

Alibaba also has investments in a department store operator, a logistics network and a product ID and tracking systems company. In March it took a stake in an appliance maker and its logistics business to provide improved delivery and installation services for buyers.

Source:

abcnews.go.com

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Alibaba in talks with 6 banks for US IPO lead roles: report

Hong Kong:

Chinese e-commerce giant Alibaba Group Holding Ltd has decided to hold its long-awaited initial public offering (IPO) in the United States and sources say it is in discussions with six lenders to underwrite the deal, in what is set to be the most high-profile IPO since Facebook Inc's listing nearly two years ago.

Alibaba said in a statement on Sunday it had decided to begin the US IPO process, ending months of speculation about where it would go public.

Separately, sources told Reuters that Alibaba is in discussions with Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs Group, J P Morgan, and Morgan Stanley for lead underwriting roles.

Most of the six banks are to set to win the coveted role of joint global coordinator, added the sources, who were not authorised to discuss the matter publicly.

Analysts estimate the Hangzhou, China-based company has a value of at least $140 billion, and the IPO proceeds could exceed $15 billion, Reuters previously reported. The deal would be a huge coup for the six banks, as it would yield an estimated $260 million in underwriting fees, assuming 1.75 per cent commission, and catapult them in league table rankings.

Alibaba declined to comment on the banks working on the deal. The banks mentioned in the report either declined comment or did not respond to Reuters' requests for a comment.

"This will be a huge deal, bigger than what people were anticipating," one person familiar with the process said, adding that the IPO was expected to be kicked off "very soon".

Reuters reported on Saturday that Alibaba is planning a US IPO in the third quarter, with a filing of documents expected as early as April.

Billionaire Ma

Alibaba, whose platforms handle more goods than EBay Inc and Amazon.com Inc combined, was founded in 1999 by former English teacher Jack Ma and 17 other people. It has grown from a startup in Mr Ma's apartment to a behemoth with offices around the world and more than 20,000 employees.

The listing will be closely watched by Alibaba's two largest shareholders - Yahoo Inc, which owns 24 per cent, and Japan's Softbank Corp, which controls 37 per cent. Alibaba founders and some senior managers jointly own about 13 per cent of the company.

Yahoo has said it plans to trim its stake in Alibaba through the IPO. It initially invested in the Chinese e-commerce giant in 2005.

Alibaba's decision to go to the United States is a blow to the Hong Kong stock exchange, which was initially the company's preferred venue for the IPO.

Alibaba also said in a statement on its corporate news Web site it might consider extending its public status to Chinese capital markets in future in order for investors there to be able to share in its growth.

Alibaba, which controls about 80 per cent of the country's e-commerce, had been in discussions with the Hong Kong stock exchange and the Securities and Futures Commission since last year about a listing, but the island city's regulators blocked its proposal as it violated the "one-share-one-vote principle".

Alibaba's executive vice chairman Joe Tsai upped the rhetoric against Hong Kong when he told Reuters last week that the firm would not change its partnership structure in order to list on the Hong Kong stock exchange.

After an initial rebuff, Alibaba and the Hong Kong regulators were back at the negotiating table late last year, to find a solution to the problem. While the Hong Kong Exchanges and Clearing Ltd has initiated a review of its listing rules to accommodate more flexible structures, an

y change to the existing rules would take months.

"We wish to thank those in Hong Kong who have supported Alibaba Group," Alibaba said in its statement.

"We respect the viewpoints and policies of Hong Kong and will continue to pay close attention to and support the process of innovation and development of Hong Kong."

Copyright @ Thomson Reuters 2014

News Source: profit.ndtv.com

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LinkedIn Co-Founder Defends EBay Against Icahn

Carl C. Icahn's battle against eBay has drawn a number of boldface names into the fray. The latest entrant happens to be one of the most prominent executives in Silicon Valley at the moment: the LinkedIn co-founder Reid Hoffman.

In an online post on — where else? — LinkedIn, Mr. Hoffman criticized his fellow billionaire for waging a battle based on short-term thinking. Spinning out PayPal from eBay or selling it outright might generate a quicker return for shareholders, he argued, but it might inhibit the payments processor from reaching its full potential.

The LinkedIn co-founder draws a distinction between Wall Street and Silicon Valley, arguing that the tech sector is focused on long-term growth, sometimes at the expense of shorter-term returns for shareholders.

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Mr. Hoffman also defended the original takeover of PayPal by eBay, a deal he helped engineer as a senior vice president at the payments company. Under the aegis of eBay, PayPal has become an integral part of its corporate parent, benefiting from higher profit margins in transactions tied to the online marketplace and gaining capital to invest in nascent operations like mobile and real-world payments.

David Paul Morris | Bloomberg | Getty Images

Reid Hoffman, chairman and co-founder of LinkedIn Corp.

From Mr. Hoffman's post:

While PayPal is no longer a startup, it still has massive growth prospects. But to someone who isn't investing in the long term, it's just a cash cow that's ready to be slaughtered.

That's why Carl Icahn is churning out letters to shareholders so fast he actually rechristened ex-PayPal COO and Yammer founder David Sacks as "David Yammer" in his first missive. It's hard to imagine he could have a coherent long-term plan given that his due diligence doesn't extend to surnames. (It's since been corrected.)

Icahn is determined to manufacture consent for a spin-off, then a sale, so he can make a quick profit on that PayPal premium.

If you believe that it takes more than a few caustic letters to shareholders and a quick trade to deliver compounding returns to investors over time, Icahn's argument loses much of its zing.

—By Michael de la Merced of The New York Times

News Source: www.cnbc.com

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