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November 11, 2009

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Home » Business » IT upbeat despite profit dip

ALIBABA.COM, China's largest e-commerce company, yesterday reported its worst profit in three quarters after betting on acquisitions and product development to tap the region's early recovery from the global downturn.

The company, Yahoo's business partner in China, saw limited growth potential from this year's fourth quarter to the beginning of next year, it said in Shanghai, and was looking for more partnerships in the United States to expand its business.

Despite the weak profit, the growth campaign is helping to drive up the company's user base.

"From these numbers it looks like the fourth quarter will be strong," said Patrick Yau, an analyst with Macquarie Research.

"The membership base is growing nicely both in the domestic marketplace and the international marketplace and growth is picking up rather than slowing down.", the listed unit of Alibaba Group, in which Yahoo holds a nearly 40 percent stake, reported a 20 percent decline in its third-quarter profit to 236 million yuan (US$34.57 million).

The profit was driven down by total operating expenses that shot up 61 percent to 669 million yuan in the third quarter.

"As we enter recovery, we see a stronger economic environment in Q4 and we remain cautiously optimistic for next year to remain relatively flat," Alibaba CEO David Wei said in a statement.

He said on a conference call the company would see a strong recovery in the fourth quarter due to restocking and increased demand for Chinese exports as the global economy started to recover, but that such growth may not continue at such a high rate into next year's first quarter.'s shares have more than tripled this year on hopes that China's economy would help pull the region out of recession on the back of a 4 trillion yuan stimulus package by the central government, which has encouraged spending through easy credit and other incentives.

But the shares are still well below highs hit just two years ago, just after the company's float., which last month agreed to buy a majority stake in Chinese Web-hosting company HiChina for US$63.8 million, has said 2009 will be a year of investment for the firm as it seeks to grow beyond its home China market.'s revenue grew 32 percent in the third quarter, with net additions to its fee-paying service, China Gold Supplier, up 175 percent. Deferred revenue rose 42 percent year on year to 3 billion yuan.



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