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Alibaba Posts Highest Growth In A Year Despite Sluggish China

China e-commerce giant Alibaba ( BABA ) turned in a quarterly earnings report early Thursday that largely eased concerns of slowing performance, despite a sluggish Chinese economy. Alibaba reported revenue of $3.75 billion for its fiscal Q4 ended March 31, beating the Wall Street consensus of $3.58 billion. Sales rose 39% in local currency year over year, the company’s highest growth rate in the past four quarters. Earnings per share minus items rose 88% to 33 cents, but that was far below the consensus of 55 cents. Costs associated with new businesses initiatives and rising logistics and order-fulfillment costs weighed on the company. Still, Alibaba stock was up nearly 4% in early trading in the stock market today , near 79. The stock is up 35% from a seven-month low of 59.25 touched on Feb. 9. Alibaba credited the revenue beat to strong growth in mobile users, active buyers and transactions on its China e-commerce platforms. “Our focus on long-term strategic priorities — globalization, rural expansion, building a world-class cloud computing business and creating a comprehensive media and entertainment platform — has laid a strong foundation for future growth,” Alibaba CEO Daniel Zhang said in the earnings release. Alibaba competes with JD.com ( JD ), Baidu ( BIDU ) and Tencent Holdings ( TCEHY ) in various segments of China’s Internet economy. JD is China’s largest online direct-sales retailer, Tencent dominates in messaging and gaming, and Baidu is China’s search leader. The four are the largest Internet companies in China and have been investing aggressively in new areas to spur growth. JD is scheduled to report earnings before the market open on May 9. Alibaba reported gross merchandise volume (GMV) of $115 billion, slightly edging the consensus of $112 billion and up 24% year over year. Transactions through mobile devices accounted for 73% of GMV volume. It reported annual active buyers of 423 million, up 16 million from the prior quarter and up 21% year over year. Monthly mobile active users reached 410 million, an increase of 17 million from the prior quarter and up 42% year over year. Alibaba’s cloud computing and Internet infrastructure business continued its rapid expansion, with revenue jumping 175% year over year to $165 million. That’s above the 126% growth achieved in the prior quarter.

JD.com Q4 Revenue And Q1 Outlook Beat Views; Stock Rises

China e-commerce company JD.com ( JD ) reported fourth-quarter earnings early Tuesday that showed strong revenue growth and a lower-than-expected loss, defying concerns of economic weakness in that country. JD, the largest online direct-sales company in China, also provided Q1 revenue guidance that beat Wall Street views, with the company seeing sales of 53 billion to 55 billion yuan ($8 billion to $8.4 billion), up 45% to 50% from Q1 2015. The analyst consensus was for 53.1 billion yuan. JD reported Q4 revenue of $8.35 billion, up 57% in local currency year over year, beating the consensus estimate of $7.95 billion. For the year, revenue rose 58% to $28 billion. The company reported a 7-cent per-share loss minus items, where analysts polled by Thomson Reuters had forecast a 12-cent loss. JD had posted a 6-cent profit in the year-earlier quarter. “JD posted pretty strong results, especially user growth and in its gross merchandise volume,” said Henry Guo, an analyst at Summit Research. “The company is well positioned in the market, showing that consumers are increasingly coming to JD for shopping.” JD offers a wide range of electronics, apparel, home appliances, food and beverages and other general merchandise. Its expansion efforts include online-to-offline retailing and flash sales — to help it compete in China’s burgeoning e-commerce arena against Alibaba ( BABA ), Vipshop Holdings ( VIPS ) and others. The e-commerce company said gross merchandise volume (GMV), which is the total value of goods sold, rose 69% to $22.2 billion for the quarter. For the year, GMV rose 78% to $71.4 billion. Active annual customer accounts rose 71% to 155 million. JD said is has about 99,000 merchants on its online marketplace. JD stock was up 3.5% in afternoon trading in the stock market today , near 26.50, and it hit its highest point since late-January. JPMorgan initiated coverage on JD last week with an overweight rating and price target of 33. Investors Worry About China Economy Slowing growth in China has hurt stocks, particularly Chinese Internet stocks. Nomura Securities, in a research note last month, said most investors are preoccupied by the economic risks in China, leading to the underweighting of China internet stocks. “Many investors we spoke with agreed that the Internet sector was oversold, but they would rather wait until the macro picture becomes clearer,” the report said. In the company’s earnings conference call with analysts, company CEO Richard Liu said JD’s momentum continued throughout 2015. “We have made excellent progress on our key strategic partners,” he said. “China’s middle-class consumers increasingly demand quality brands and authentic products, and we have been very effective at winning over more customers.” China’s slowing economy has not deterred Chinese consumers from online shopping, S idney Huang, JD’s chief financial officer, said on the call. “We’re encouraged by these trends. W ith our differentiated value proposition and a better customer experience, we remain cautiously optimistic about our 2016 growth outlook,” he said. JD’s earnings followed Vipshop’s, released Thursday. Vipshop reported Q4 earnings that beat estimates, but its shares dropped as first-quarter guidance fell short. Vipshop is an online discount retailer that sells branded apparel, accessories, home goods and other lifestyle products. It specializes in so-called flash sales, in which a set number of goods are sold over a limited time. On Jan. 28, Alibaba reported its fiscal Q3 for the quarter ended Dec. 31 that topped Wall Street expectations. Fulfilled orders from JD’s core business units through mobile devices accounted for about 61% of total orders in Q4, up 230% from Q4 2014. JD said it’s O2O business unit, called JD Daojia, in Q4 formed a strategic cooperation with Yonghui, a leading supermarket chain in China. JD Daojia has partnered with 56 Yonghui stores in five cities to provide two-hour delivery service for customers’ grocery orders. JD said JD Daojia provides O2O services in 12 major cities across China. A year ago, JD.com formed a strategic partnership with Tencent Holdings ( TCEHY ), a leading Internet company in China, aimed at providing superior e-commerce services to mobile and Internet users in China. Tencent, China’s leader in messaging and gaming, is set to report earnings before the market opens March 17. It’s traded over the counter in the U.S., with its primary stock listing in Hong Kong, where it is a component of the blue-chip Hang Seng index.

Will Amazon.com Surpass Wal-Mart This Year? Maybe Sort Of

Third-party sellers drive big sales for e-commerce leader  Amazon.com ( AMZN ), so much that if you take a look and add them up, Amazon is getting very close to catching up with longtime retail king Wal-Mart. At least, so says  ChannelAdvisor ( ECOM ) Executive Chairman Scot Wingo, after looking at the numbers in a blog post this week  that he called a deep dive into Amazon’s financials. Looking at third-party sales and what he says is the 10% commission that Amazon takes and includes as revenue in its quarterly financials,  Amazon’s the total transactional value — the amount of goods the company moves — might surpass  Wal-Mart ( WMT ) as soon as this year, Wingo says. ChannelAdvisor works with third-party sellers on Amazon and other platforms, and provides a range of related strategic services and technologies. One caveat is that Wingo excludes groceries, a small business for Amazon at this point but a big one for Wal-Mart. Excluding groceries, Wingo calculates that Amazon’s total transactional value — Amazon revenue plus third-party sellers — was close to $225 billion in 2015. Amazon reported 2015 revenue of $107 billion, but of course that does not include the great majority — 90%, says Wingo — of third-party revenue. Wingo estimates third-party sellers added $131.8 billion to Amazon’s total transactional volume last year, for the total of $225 billion. Wal-Mart hauled in $242 billion when you exclude groceries, which accounted for half of the company’s total revenue of $485 billion in fiscal 2015, Wingo said. He used data for Wal-Mart’s fiscal 2105 ended Jan. 31, 2015, but the company’s final fiscal 2016 revenue is  expected to be roughly the same, with analysts expecting $483 billion. Amazon, on the other hand, has been boosting its annual revenue at a 20% clip. “Amazon has twice the economic impact people think,” Wingo told IBD via email, when we asked about his blog post. Since 2009, Wal-Mart has had a third-party sellers program open to “select” retailers. The company does not break out its revenue for its third-party sellers, and Wingo contends it is not significant. Add it up, and by these metrics, Amazon is heading to surpass Wal-Mart this calendar year. Said Wingo, “unless something slows down at Amazon, it will put considerable pressure on other offline and online retailers.” Amazon did not return several requests for comment. Amazon Pressure On E-Tail Only Getting Worse Yet, Wal-Mart has been “vocal” about its plans to aggressively build-out its e-commerce platforms. In December, Wal-Mart spokesman Dan Toporek told IBD that the firm has been building “dozens” of online fulfillment centers, and has made a big bet on its digital sales platform through its now 2,500-strong workforce in Silicon Valley. Half the company’s online sales are on mobile devices, he said. Nonetheless as Amazon expands, Wingo says other sellers will suffer. In his blog post, he said “we also expect that as Amazon ‘absorbs’ the next $100 (billion) in (market) share, a lot of retailers will lose share as a consequence — some will cease to exist entirely.” It’s going to take Amazon a lot less time to reach its next $100 billion in revenue than it will take Wal-Mart, Wingo wrote. Wingo says in the blog post that Amazon added $20 billion in gross merchandise volume (GMV) in Q4 above Q4 2014, and that those additions alone were near the total Q4 GMV for  eBay ( EBAY ). An eBay spokeswoman has told IBD that third-party sellers are often in danger of being shoved out by Amazon as a result of Amazon deciding to start offering a seller’s product itself. Some observers have said Amazon can learn what is popular by data it gathers from its third-party sales. Wingo, though, says third-party sales are becoming more profitable for Amazon, thanks to the company’s infrastructure expansion and improvements, and that third-party sales are rising much more quickly on Amazon than are Amazon’s sales of its own goods. Amazon’s surging growth has propelled the company to a position in e-tail that in some ways makes it appear  impenetrable  — though the firm’s Q4 earnings  did not meet  lofty expectations . Image provided by Shutterstock .