8:00 pm ET May 5, 2015 Wall Street Jounal
blogs.wsj.com/digits/2015/05/05/...hat-to-watch-2/?mod=WSJBlog
The Chinese e-commerce giant is expected to post slower revenue growth from the previous quarter, in part because China’s Lunar New Year holiday makes the beginning of the calendar year a traditionally slow period. Analysts and investors will also be watching for any impact from recent changes in the company’s policies to select merchants more stringently and to fight counterfeits.
EARNINGS FORECAST: Alibaba is expected post net income of 3.28 billion yuan ($532 million) in the quarter ended in March, down 40% from the same period a year ago, under U.S. generally accepted accounting principles, according to 18 analysts surveyed by S&P Capital IQ. Analysts attribute the expected decline largely to Alibaba’s spending on stock awards for employees and executives. Non-GAAP net profit, which excludes that sort of expenditure, is forecast at 7.45 billion yuan, according to the survey.
REVENUE FORECAST: Forecasters estimate revenue rose about 40% to 16.9 billion yuan from 12 billion yuan a year earlier, though it likely fell 35% from the previous quarter, according to 28 analysts surveyed by S&P Capital IQ. In addition to the holiday effect, some analysts also say Alibaba’s efforts to fight fraudulent merchant behavior by imposing stricter rules on vendor selection could drag down growth in the value of transactions on its platforms.
MARGINS: Gross profit margin in the March quarter is expected to slip to 66.8% from 71.2% a year earlier and 71.3% in the quarter that ended in December, according to analysts’ estimates.
WHAT TO WATCH:
FIGHTING FAKES: Investors and analysts will likely expect Alibaba to address the question of how its latest moves to restrict who can open stores on its platforms may dent its bottom line in the short term. Barclays analysts say there is a risk that Alibaba may miss estimates because of potential disruption from the new Tmall policy changes and stepped up anti-counterfeiting efforts, as well as other factors. Faced with greater regulatory scrutiny, Alibaba has implemented rules in the past few months to raise the quality of its marketplaces and impose more severe punishments for violators.
MOBILE SHIFT: Investors will continue to monitor the proportion of transactions made on Alibaba’s platforms that come from mobile users to see how much it has risen since the December quarter of 42%. More importantly, Alibaba is under pressure to show that it can improve the rate at which it generates revenue from mobile, which is less lucrative than that of personal computers because smaller screens mean lower advertising dollars. In the quarter that ended Dec. 31, the rate at which revenue was generated from the value of all merchandise transacted, also known as the monetization rate, was 2.7% overall and 1.96% for mobile.
REORGANIZATIONS: Investors are likely keen to hear if the shuffling of leadership of Alibaba’s shopping platforms has helped improve supervision, raise efficiency and better differentiate between its various platforms. Investors are also interested in Alibaba’s efforts to integrate its acquired businesses, such as mobile browser UCWeb Inc., and mapping business AutoNavi, into its broader strategy, as well as more details on Alibaba’s $2.5 billion deal in April to shift its Tmall online-pharmacy business to its publicly traded health-care arm. Its film arm, Alibaba Pictures, is also facing a reorganization, with Alibaba proposing an injection of assets into it.