- Alibaba Posts Strong Sales Growth Amid SEC Accounting Probe
Alibaba recorded better than expected profits and revenues in its third quarter as the Chinese ecommerce group played down concerns about China’s flagging economy and an ongoing investigation, ahead of the annual Singles Day online shopping spree.
The company said that preparations for Singles Day on November 11, the world’s largest online shopping day, have not been affected by an investigation into its accounting practices by the US Securities and Exchange Commission disclosed in May.
Among its questions, the SEC has asked about the large unaudited numbers Alibaba publishes on sales on Singles Day, which analysts took to mean the measure it uses for total sales across its platforms, gross merchandise value.
Alibaba did not report gross merchandise value in the second quarter for the first time, but during a conference call with analysts on Wednesday, Daniel Zhang, chief executive, said that “GMV so far looks good and growth is on track”.
Joe Tsai, Alibaba executive vice-chairman, also told analysts that there was “no factual basis” to a story in the New York Post newspaper alleging that a high-level whistleblower was helping the SEC in its investigation. The SEC has said that its investigation did not mean Alibaba had breached any laws.
Shares in the group initially climbed more than 4 per cent in pre-market trading in New York but dropped lower after the market opened.
Alibaba said sales in the quarter to the end of September rose 55 per cent to Rmb34.3bn ($5.1bn) compared with the year before, topping Wall Street estimates of Rmb33.9bn. Earnings per share on an adjusted basis rose to Rmb5.26 from Rmb3.61 a share a year ago, which beat expectations of Rmb4.69.
Alibaba makes its money through selling space to merchants on its marketplaces, in the form of fees and advertising revenues. Alibaba’s revenues growth has continued to be strong, despite an economic slowdown across China, mainly from a 47 per cent increase in online marketing services revenues, the group said.
In the period Alibaba reported 439m annual active buyers, a rise of 14 per cent compared with last year.
“We operate a superior marketplace,” said Mr Tsai, adding that Alibaba has fewer limits than its competitors on the amount of advertising load that consumers will accept on an ecommerce website.
“There is no church and state when it comes to content and ads, because they come to the site with very high commercial intent,” he said.
He also cited technological advances in using data to increase click-through rates.
“Our ability to personalise every single user interface, so every person coming to the platform can see different products, and different recommendations; that drastically increases our ability to generate relevant clicks … and drive volumes,” said Mr Tsai.
Net income dropped to Rmb7.1bn, from Rmb22.7bn, the company said, blaming the fall on a large non-cash revaluation gain last year from its interest in Alibaba Health.
Alibaba said that revenue rose 41 per cent in its core ecommerce business to Rmb28.5bn. Meanwhile, its cloud computing unit notched sales growth of 130 per cent to Rmb1.5bn.
Mr Zhang added: “Beyond the strong performance of our core commerce business, we are pleased with the continued rapid growth of our cloud computing business. We also see huge potential in our newly integrated digital media and entertainment unit.”
Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd
The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.
The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.
The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.
The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.
Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.
The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.
Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins
Oil Prices Recover from 4 Percent Decline as Joe Biden Wins
Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.
This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.
Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.
On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.
“Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”
The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.
“There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.
“Either you’re crimping energy demand or consumption behavior.”
Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020
Revenue of OPEC Members to Drop to 18 Year Low in 2020
The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.
EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.
“If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.
The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.
It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.
It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.
“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”
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