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Alibaba profit down, invests in mobile, marketing

By WTOP Staff

MAE ANDERSON
AP Technology Writer

NEW YORK (AP) — Alibaba’s financial results in its first quarter as a publicly traded company highlight its strategy of plowing its profit back into investments, particularly in mobile commerce and marketing.

The Chinese e-commerce powerhouse said net income fell 39 percent in the July-September period despite a 54 percent surge in revenue on strong user demand.

The results released Tuesday show that Alibaba has a similar strategy as U.S. e-commerce retailer Amazon: Invest profit back into the company to spur long-term growth. Last month, Amazon.com Inc. reported a large loss in the third quarter despite a 20 percent increase in revenue.

But the two companies operate differently. Amazon works with third-party sellers but it also sells and distributes products directly, while Alibaba does not compete with its merchants or hold inventory. Instead, Alibaba serves as a conduit that links buyers and sellers of all kinds. It makes money from transaction fees and marketing services.

Alibaba’s biggest tech competitors in China are Tencent Holdings Ltd., which operates online games and the popular WeChat messaging service, and Baidu Inc., a Chinese search engine. All three companies are hoping to capture mobile revenue as more users shift to shopping and spending time on mobile devices.

It was Alibaba’s first earnings report since it went public on the New York Stock Exchange in September. The $25 billion initial public offering was the largest ever. Alibaba operates such popular e-commerce platforms as Taobao and Tmall in China. Alibaba’s platforms account for some 80 percent of Chinese online commerce.

Chinese e-commerce is growing fast. Still growing at an explosive rate, online shopping is forecast by consulting firm McKinsey to triple from 2011 levels to $400 billion a year by 2015. Beyond that, Alibaba has said it plans to expand into emerging markets and, eventually, into Europe and the U.S.

In the latest quarter, net income after paying preferred dividends fell to $485 million, or 20 cents per share. Excluding one-time items, net income was 45 cents per share, matching analyst expectations, according to FactSet.

Alibaba, which is based in Hangzhou, China, said the decline resulted partly from $490 million in stock-option expenses related to performance-based and retention grants to some executives before its IPO, with vesting periods of four to six years.

Other costs that the company took during the quarter included consolidating newly acquired businesses, investing in its mobile operating system and digital entertainment, and marketing costs.

“The fundamental strength of our business gives us the confidence to invest in new initiatives to add new users, improving engagement and customer experience, expand our products and services and drive long-term shareholder value,” Chief Financial Officer Maggie Wu said.

Revenue, as expected, was strong. Revenue rose 54 percent to $2.74 billion, beating analyst expectations of $2.61 billion. It was boosted by more mobile commerce and growth across its platforms.

Gross merchandise volume, the total amount of goods sold, rose 49 percent during the quarter. Annual active buyers rose 52 percent to 307 million. Mobile monthly active users more than doubled to 217 million.

Cantor Fitzgerald analyst Youssef Squali said strong results reflect “solid execution against the massive growth opportunity both in and outside of China.”

He said that even though Alibaba did not give any outlook, it’s likely that its strategy of investing in new initiatives like its mobile business, digital entertainment and higher marketing are likely to remain elevated.

Shares of Alibaba Group Holding Ltd. rose $3.17, or 3.1 percent, to $104.97 in afternoon trading Tuesday. That’s 13 percent higher than the $92.70 the stock opened at on its first day of trading.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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