BEIJING, China — Alibaba Group Holding Ltd., China’s online marketplace for products from Louis Vuitton bags to Boston lobsters, swung to a quarterly profit ahead of a potential initial public offering.
Net income attributable to ordinary shareholders was $792 million in the three months ended September, up from a loss of $246 million a year earlier, according to a presentation from Yahoo! Inc., which owns a 24 percent stake in China’s largest e- commerce company. Revenue rose 51 percent to $1.78 billion.
Alibaba is competing with Tencent Holdings Ltd. and Baidu Inc. for China’s 618 million Internet shoppers by making deals in its home market and the U.S. to extend its e-commerce reach to mobile games and messaging. The Hangzhou-based company has been valued at as much as $190 billion as it considers moving toward the biggest IPO since Facebook Inc.
“Summer season was good as more people, especially students, shopped online,” Ricky Lai, an analyst at Guotai Junan International Holdings Ltd. in Hong Kong, said before the announcement. “Good results will give a better valuation for their potential IPO.”
Yahoo, which posted results for the three months ended December earlier today, reports Alibaba’s earnings with a one- quarter lag.
Alibaba was valued at $120 billion, according to the average estimate of six analysts compiled in October after the previous earnings statement from Yahoo. Carlos Kirjner at Sanford C. Bernstein & Co. estimates the company is worth $190 billion, which is more than double Facebook’s initial offering.
At Bernstein’s estimate, Alibaba would trail only Google Inc. among the most-valuable Internet companies, eclipsing Amazon.com Inc., Facebook and Tencent.
Japan’s SoftBank Corp., controlled by billionaire owns about 37 percent of Alibaba, the wireless carrier said in July.
Alibaba’s earnings for the quarter compare with $422 million for Facebook in the same period.
Alibaba, formed by Jack Ma and partners in 1999 as a marketplace for Chinese companies, has tapped into the nation’s boom in manufacturing and trade spurred by a wave of economic liberalization. The former English teacher owns about 7.4 percent of the company and has an estimated personal net worth of $3.7 billion, according to the Bloomberg Billionaires Index.
Ma’s company doesn’t sell merchandise itself. Instead, it runs platforms including Taobao Marketplace and Tmall.com that connect retail brands with consumers, a cross between Amazon.com and EBay Inc. It makes most of its sales from commissions and advertising.
Alibaba accounted for 70 percent of package deliveries in China last year, Ma said in a letter published in February 2013 in a newspaper owned by the State Post Bureau. Sales on its two main platforms reached 35 billion yuan during a sales promotion on Nov. 11.
Alibaba is extending its reach with Web users through acquisitions and new services such as instant messaging, where its Laiwang competes with Tencent’s WeChat. The company this month also said it plans to invest in Citic 21CN Co. to enter the drug data industry.
Other deals in the past year include a stake in New York- based luxury-sales site 1stdibs.com Inc.; an investment in U.S. retail website ShopRunner Inc.; and holdings in appliance maker Haier Electronics Group Co. and its logistics business.
In April, Alibaba agreed to buy an 18 percent stake in Sina Corp.’s Weibo, China’s largest Twitter-like service.
Executives at Alibaba have talked about an initial public listing in Hong Kong or New York this year.
Ma and the company’s partners originally wanted to maintain control in a potential Hong Kong listing through a partnership that could nominate a majority of board members. The talks broke down in September, according to people familiar with the matter.
The company had 28 partners as of Sept. 10, Ma said in an e-mail to employees. They include co-founder Joseph Tsai and Chief Executive Officer Jonathan Lu.
By Lulu Yilun Chen; Editors: Robert Fenner, Michael Tighe