Jack Ma, founder and executive chairman of Alibaba Group Holding Ltd (NYSE:BABA) has released warning signals for a cut down on hiring in the e-commerce giant of China from immediate effect.
At a meeting held this week, Ma has raised concern on the fast growing company that has noted total employee strength of 34,081 as on December 31, 2014, which is 63% more than compared to year-ago period.
Mismatch in Revenue and cost alarming
Even though the revenue has grown to 40%, the 3Q estimated a 69% increase in fiscal costs and this resulted in shrinking of operating margin from 47% to 36%. As a result, there was a decline in the net income to $5.9 billion.
The observations have come ahead of the 1Q2015 results that are just around the corner. As of January 28, the shares of Alibaba have seen a decline of 16%. As the 3Q earnings failed to meet the expectations of the Wall Street, analysts revised their price target on Alibaba stock.
Even the other similar firms are taking cautionary steps in this regard. Another e-commerce firm JD.com that follows the Amazon.com, Inc.(NASDAQ:AMZN) model is expected to report a 1Q2015 revenue of $5.75 billion. In March 2014, JD.com and another similar company Tencent entered a partnership which made the latter increase investment in the former with a stake of 18%.
Thus, Alibaba is only being cautious and wants to tread the future course cautiously so as to increase the revenue and decrease fiscal cost.
Intime’s Chairman sells shares
Shen Guojun, Chairman of China mall operator Intime Retail (Group), also sold some of his shares in the company. From a stake of 33.1%, he now owns 30.4% stake after selling his shares to the company CEO Chen Xiaodong. Alibaba Group Holding has a 32.8% stack in Intime.
On Thursday, the Chinese e-commerce giant is going to share the fiscal results for this quarter and it is estimated that per share rate will see a dip at $0.45 from $0.75 in the last fiscal.
The revenue for the 1Q2015 is estimated at $2.78 billion by the company amid cost cutting measures that are aimed at increasing profits and cutting the company expenditure.