Alibaba Reports Disappointing Revenue Growth -- Update

By George Stahl 

Alibaba Group Holding Ltd. said revenue rose 40% during its December quarter as the Chinese e-commerce giant saw a continued surge in users buying items through mobile devices.

Still, shares of Alibaba fell about 7.4% to $91.20 in premarket trading as the company's revenue fell short of expectations. Through Wednesday, the stock had risen 45% since its initial public offering price of $68 in September,

The results come as Alibaba is embroiled in a rare, high-stakes public dispute with a powerful Chinese government agency that is accusing the company of allegedly failing to crack down on the sale of fake goods, bribery and other illegal activity on its sites.

In response, Alibaba has said it is "willing to assume the responsibility of fighting fakes" and that its effort "is far from complete." But it also criticized the inspection methods of the Chinese official and called the agency's conclusion biased.

For the December quarter, mobile transactions accounted for 42% of Alibaba's overall transactions, up from 36% in the September quarter and 20% from a year earlier. The number of active users on Alibaba's mobile platforms rose to 265 million in December, up from 217 million in September from 136 million a year ago.

Alibaba's ability to boost revenue from its mobile platforms has been scrutinized as more Chinese Internet users go online from their mobile devices.

Overall, Alibaba's earnings fell 28% to $964 million, or 37 cents a share. Excluding certain items, per-share earnings rose 13% to 81 cents a share. Revenue was $4.22 billion.

Analysts, on average, were expecting earnings of 75 cents a share on revenue of $4.45 billion.

Alibaba said that on its China retail marketplaces, gross merchandise volume for the quarter increased 49% and annual active buyers rose 45% year-over-year.

Earlier this week, Yahoo Inc. unveiled a plan to spin off tax-free its nearly $40 billion of holdings in Alibaba. The spinoff is seen giving the Chinese e-commerce giant the chance to buy its own shares at a lower tax rate than if it tried to acquire them now.

Alibaba said it had $21.07 billion in cash as of Dec. 31.

Write to George Stahl at [e-mail]

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