Alibaba’s profit plummets nearly 60% as tech crackdown, Covid bite, Telecom News, ET Telecom

Beijing: Chinese e-commerce giant Alibaba said on Thursday its profits fell 59% in the last financial year, joining other tech firms that reported lackluster results while grappling with Covid-19 restrictions and a crackdown on the sector.

China’s economy has been hit by the fallout from tough Covid restrictions, including shutdowns and transportation restrictions that have kept consumers at home, spiked unemployment and tangled supply chains.

Alibaba has also faced increased competition and a broad regulatory crackdown on alleged anti-competitive practices by Chinese tech giants, driven by fears that huge internet companies control too much data and grow too quickly.

The Hangzhou-based group warned it would not give forward financial guidance due to Covid risks and uncertainty after annual profit fell to 62 billion yuan ($9.8 billion).

Citing “macroeconomic challenges that impacted supply chains and consumer sentiment,” Alibaba also reported a loss of 16.2 billion yuan for the January-March quarter, as the value of its investments fell. fall.

The tech giant has seen its market value plummet since Beijing launched its sweeping crackdown in 2020 against some of China’s biggest companies.

The crackdown included the last-minute cancellation of a planned IPO by Alibaba’s financial arm, Ant Group, which would have been the world’s largest public offering at the time.

Last year, the company was also hit with a record $2.75 billion fine for alleged unfair practices.

But Alibaba – seen as a gauge of consumer sentiment – said on Thursday its revenue rose 9% in the last quarter to 204.1 billion yuan.

That was better than expected in a Bloomberg forecast, after Chinese consumers took to shopping online during the Covid lockdowns that kept millions at home.

The company’s revenue – generated primarily by its core e-commerce businesses – rose 19% for the year ended March 31.

Covid ‘uncertainties’ – In a sign of a patchy outlook, however, the company warned that its domestic business had been “significantly affected by the resurgence of Covid-19 in China, particularly in Shanghai”.

“Given the risks and uncertainties arising from Covid-19…we believe it is prudent at this time not to provide financial guidance as we typically do at the start of the financial year,” he said. -he adds.

Alibaba’s earnings follow a string of lackluster results from major Chinese tech firms, with internet giant Baidu announcing a first-quarter net loss of 885 million yuan ($140 million) on Thursday.

Baidu’s business has been “negatively affected” by the recent resurgence of Covid-19 in China since mid-March, co-founder Robin Li said in a statement.

He added that virus-related challenges continue to put pressure on his near-term operations.

Tencent on Wednesday reported record quarterly revenue growth to 135.5 billion yuan ($20.1 billion) in the first quarter, putting the year-over-year expansion near zero.

China is the latest major economy to stick to a strict zero-Covid policy, which is currently being tested by the infectious Omicron variant.

The country’s economic downturn now appears to have prompted a softer approach to the vast money-making tech sector.

In recent weeks, the government has said it will put in place measures to support the virus-stricken economy and signaled it will ease the crackdown.

Chinese tech stocks surged in late April after officials pledged support for internet companies at a Politburo meeting.

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