Alibaba.com’s Hazy Revenue Outlook
The new chief executive of Alibaba.com held his first conference call with reporters on Thursday – and left listeners scratching their heads when his remarks about the company’s revenue forecast didn’t seem to add up. Jonathan Lu took his post at Alibaba.com, which operates websites that connect buyers and suppliers, after former CEO David Wei resigned following a fraud scandal in February. Mr. Lu was thus handed the weighty task of rebuilding the company’s credibility and category_iding it through an in-progress business transition, entailing a new focus on boosting revenue per user rather than raising the raw user numbers that have fueled growth in recent years.
Mr. Lu, who is also CEO of Alibaba.com’s sister company Taobao, an online shopping website, made a quiet debut as Mr. Wei’s replacement. Having just taken the job, he didn’t speak to reporters in March after Alibaba.com announced a set of financial results. He participated in a call with analysts that reporters were allowed to listen in on, but left most of the talking to Chief Financial Officer Maggie Wu. Alibaba.com declined to make him available for interviews. Two months later, during Thursday’s conference call on the company’s first-quarter financial results, Mr. Lu seemed more comfortable speaking about the company. But his remarks on revenue growth quickly became a source of confusion.
“We forecast that basically, it’s possible the growth rate of 2011 revenue—overall revenue, may be about the same as 2010, flat,” he said early in the call, speaking in Chinese. He proceeded to emphasize he meant “revenue” and not “revenue growth” would be flat. The comment came as something of shock given the company’s recent results. Alibaba.com notched revenue growth of 29% in 2009 and 43% in 2010. But in response to a later question, Mr. Lu said revenue growth for the rest of the year would be “about the same” as the 25.5% growth Alibaba.com logged in the first quarter – hardly flat growth even by China’s high-octane standards.