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Alibaba named a new CEO on Thursday in a surprise move, an apparent effort to right itself as its revenue growth and stock price have stumbled so far this year.
China’s largest e-commerce company also posted stronger-than-expected quarterly results Thursday. Thanks to the management change and quarterly numbers, company shares jumped about 7 percent in early trading. Yahoo — whose stock is heavily tied to Alibaba’s stock — saw its shares rise about 6 percent.
Alibaba named its chief operating officer, Daniel Zhang, as its new CEO, effective this coming Sunday. Zhang, who has been operating chief since September 2013, has been with Alibaba for eight years and is a founding member in Alibaba. Current CEO Jonathan Lu will remain on the company board as vice chairman. Lu was named chief executive in March 2013, replacing founder Jack Ma.
“I’m excited to take on this new challenge. It is an immense responsibility,” Zhang said in a statement.
While US consumers don’t have access to most of Alibaba’s services, the company’s huge growth and cash stockpiles have made it a leading potential competitor against Amazon, the reigning king of e-commerce in the United States. If Alibaba gains a foothold in the US market, it could create greater competition and pricing wars in e-commerce, which is already a highly competitive and low-profit business.
Meanwhile, Amazon has struggled to grow in China, where Alibaba and JD.com are major players in the market. Hoping to gain some traction there, Amazon in March opened an online storefront within Alibaba’s Tmall site, making itself Alibaba’s customer and competitor at the same time.
Alibaba’s CEO change follows some other executive shifts in recent months, with Alibaba shuffling leadership at Tmall and at Alimama, its online marketing business.
The latest management decisions come after Alibaba has hit a rough patch this year, following its launch of the biggest initial public offering ever — raising $25 billion — last September. The company has had to contend with Chinese regulators accusing it of allowing fake goods to be sold on its sites. Also, for the critical holiday quarter, Alibaba in January reported disappointing revenue growth. These issues have driven the company’s stock down 23 percent so far this year, as of Wednesday’s close.
These woes have been felt by Yahoo, too, which said in January that it will spin off the 384 million Alibaba shares it owns. At the time, that stock was worth about $40 billion — it’s now worth just over $30 billion, as of Wednesday’s close. Yahoo is hoping to placate its investors with the spinoff, after the Internet pioneer has struggled to find new growth amid intense competition against Google and Facebook.
For the quarter ended March 31, Alibaba reported net earnings of $463 million, down 49 percent from a year earlier, mostly due to the company awarding shares to employees. Per-share earnings, when excluding certain items, were 48 cents a share, beating analysts’ estimates of 42 cents, according to Thomson Reuters.
Revenue jumped 45 percent to $2.81 billion, also ahead of market expectations. Revenue generated from its mobile efforts — a major push for the company — surged 352 percent, to $846 million.
Wedbush analyst Gil Luria offered a bullish take on Alibaba’s future, saying the company has “a uniquely compelling combination of size, growth and profitability.”
“With another strong quarter and outlook,” Luria wrote in an analyst note Thursday, “we expect sentiment to swing back to the positive.”
Zhang, who started at Alibaba building up its Taobao online marketplace business, said during a conference call with analysts Thursday that he will focus on expanding current services — with a particular focus on mobile — looking for new businesses like cloud computing services, and developing the company’s talent.
Updated, 7:12 a.m. PT: Additional details throughout and updated stock prices.
