http://www.bloomberg.

com/news/2013-07-17/alibaba-gains-momentum-for-ipo-with-profit-margin-
double-apple-s.html
Alibaba Gains IPO Momentum With Margin
Double Apples
Alibaba Group Holding Ltd., Chinas largest e-commerce company, is building momentum for a
possible initial public offering this year with profitability double that of Apple Inc.
Alibaba posted a profit margin, which measures net income as a proportion of sales, of !. percent in
the "arch #uarter, according to an earnings presentation by $ahoo% Inc. &$H''(, which owns a
stae in the company. !pple, the maer of i"hones and i"ads, had a margin of)*.+ &AA,L( percent in
the same period.
,rofitability is being sto-ed by surging demand for ser.ices connecting businesses and consumers to
each other across China with billionaire Chairman /ac- "a last year saying Alibaba could go public
within fi.e years. 0ith analyst .aluations of as much as 1*)2 billion, the earnings growth is positioning
Alibaba for a potential I,', said "ichael Clendenin, "anaging 3irector at 4ed5ech Ad.isors.
#All Alibaba has to do is to show that they can deli.er one more #uarter of strong margins,6 said
Clendenin. 75hen theyre in a .ery good position for an I,' in the second half of the year.6
/ohn 8pelich, a spo-esman for Alibaba, didnt respond to an e-mail see-ing comment yesterday on
the companys profit margins. 5he company has no timetable for an I,', hasnt hired ban-ers and
hasnt selected a location for a prospecti.e public offering, he said in a pre.ious e-mail yesterday.
U.S. Rivals
Alibaba doesnt sell merchandise itself. Instead, it runs platforms including 5aobao "ar-etplace and
5mall.com that connect retail brands with consumers, a cross between Ama9on.com Inc. &A":;(
and <=ay Inc. &<=A$( $t maes most of its sales from commissions and ad%ertising.
5he Chinese companys profitability is far higher than its >.8. ri.als. Ama9on.com, the worlds largest
online retailer, had a net income margin of 0.&1 percent in the 'arch (uarter while )*ay $nc., the
biggest auction site, had a margin of 1+.1 percent.
Alibabas earnings more than tripled to 1??+ million in the #uarter on sales that surged @* percent to
1*. billion. 5he company posted more re.enue in the period than 8unny.ale, California-based $ahoo.
In )22A, $ahoo agreed to pay 1* billion in cash for a 2 percent sta-e in Alibaba, which also too-
control of $ahoos China operations. ,ahoo now owns about 2- percent of !libaba, a stae it %alues at
.+.1 billion, according to the presentation.
Everore !aluation
<.ercore Group LLC analysts, including ;ew $or--based Andrew "c;ellis, raised their .aluation of
Alibaba to 1*)2 billion from 1+2 billion, according to a note dated yesterday.
8ameet 8inha, a 8an Brancisco-based analyst at =. 4iley C Co. boosted his estimated .alue for
Alibaba to 1*2* billion from 1@@ billion, according to a note.
Baceboo- Inc., the biggest technology I,' of )2*), was .alued at 1*2 billion prior to its listing.
#Alibaba is still in the early days,6 said "ar- 5anner, founder of China 8-inny, a /hanghai-based
research and mareting agency. #0he cur%e is going to be a lot more %ertical than a 1aceboo.2
As analysts reassess the .alue of the company, "a is facing criticism for comments he made in a
media inter.iew. Acti.ists started an online petition and as-ed the billionaire to apologi9e for comments
he made related to the /une , *+!+ 5iananmen 8#uare cracdown in which hundreds of people
were illed when the army cleared protesters who had occupied the s(uare in the center of *ei3ing.
"iananmen S#uare
#5his wasnt a perfect decision, but this was the most correct decision,6 "a said in an inter.iew with
the 8outh China "orning ,ost that was published /uly *D. #!t any time, a leader must mae a
decision lie this.2
"a said his remar-s 7caused a terrible misunderstanding,6 and that he made them to describe the
circumstances when he had to ma-e tough decisions as C<', according to an e-mailed statement
from Blorence 8hih, an Alibaba spo-eswoman in Hong Eong.
Alibaba accounted for @2 percent of pac-age deli.eries in China last year, "a said in a letter published
in Bebruary in a newspaper owned by the 8tate ,ost =ureau. 8ales on its two main platforms reached
* trillion yuan 4.153 billion6 in 2012, while 7hina8s nominal 9:" reached &1.; trillion yuan,
according to the <ational *ureau of /tatistics of 7hina.
5he Hang9hou, China-based company has eFpanded lending, secured financing and made
ac#uisitions since "a flagged the potential I,' last year.
5he company last month closed the general syndication of an 1! billion loan, three people familiar with
the matter said. In April, it agreed to pay 1A!? million for about *! percent of 8ina Corp.s 0eibo,
Chinas largest 5witter-li-e ser.ice.
#/ac- "a doesnt want to get in the ring and fight with all these other guys,6 said 4ed5echs
Clendenin. 7Hes already figured it out that he can host the fight.6
5o contact the reporters on this storyG Lulu $ilun Chen in Hong Eong atychen@Hbloomberg.net=
!lan >ong in ?ong @ong at awong@!Hbloomberg.net
5o contact the editor responsible for this storyG "ichael 5ighe at mtigheHbloomberg.net