Five days after Alibaba announced the spin-off and listing of Cloud Intelligence Group, one of its “three major businesses,” news of its subsidiary Alibaba Cloud broke out about layoffs.
On May 23, according to the “Southern Finance” report, Alibaba Cloud began optimizing organizational positions and personnel. The overall ratio was about 7%. The personnel adjustment period was May. However, people familiar with the matter also said, “Every year, Alibaba Cloud will carry out normal organizational job and personnel optimization. The compensation standard is N+1+1. Untaken annual leave, companion leave, etc. can be discounted.”
On May 18, Alibaba officially announced that Cloud Intelligence Group, Cainiao, and Hema Xiansheng will launch listing plans. Among them, Cloud Intelligence Group, where Alibaba Cloud is located, will completely split off from Alibaba Group and go public independently within the next 12 months.
Bai Wenxi, chief economist of IPG China, said,Alibaba Cloud laid off employees before the IPO in order to optimize the organizational structure and personnel structure, improve efficiency, reduce costs, and improve performance according to the company's development needs. This is also one way to make its performance look better.
“I think there are thoughts about reducing costs and increasing efficiency, but it's definitely not important,” said Zhang Yi, Chairman and CEO of Ai Media Consulting. “Because future listings require sustainable revenue and profit growth, but it's obviously not OK if there are a large number of retired employees, soIt is necessary to accelerate the sense of crisis among internal employees through layoffs, so as to achieve the sustainable, healthy and high-quality development of future enterprises.”
1. Cloud Intelligence Group has a strong lineup
On March 28 of this year, Alibaba Chairman and CEO Zhang Yong initiated changes and announced the establishment of a “1+6+N” organizational structure.
“6” refers to the six major business groups under Alibaba Group, including Alibaba Cloud Intelligence, Taobao Tmall Business, Local Life, Cainiao, International Digital Commerce, and Big Culture Entertainment.Alibaba Cloud was divided into Cloud Intelligence Group.
In addition to Alibaba Cloud,AI, DingTalkOther businesses are also part of the Cloud Intelligence Group.
Among them, the AI business is currently a hot direction, and it is also the first topic Ma Yun appeared to talk about after returning home. In April of this year, Cloud Intelligence Group launched its latest Big Language Model (LLM): A Thousand Questions. There are also plans to incorporate the new big language model into all business applications within Alibaba's ecosystem in the near future. Since its launch, the model has received test requests for access from more than 200,000 enterprise users in various industries.
The monthly activity of DingTalk's business is ranked first in the industry. The number of users has exceeded 600 million, the number of enterprise organizations has exceeded 23 million, and the number of paid DAUs has exceeded 15 million.
Alibaba Cloud also ranked first in China's cloud computing market shareIt also surpassed Google Cloud in 2016, becoming the third largest public cloud service provider in the world, and providing services to 4 million enterprises around the world.
It is worth noting that Cloud Intelligence Group alsopersonally led by Zhang Yong, who also serves as Chairman and CEO. Therefore, among the three businesses spun off and listed by Ali, Cloud Intelligence Group, led by Alibaba Cloud, is seen as one of the most promising and imaginative sectors.
2. Alibaba Cloud's growth rate is slowing, and the three major telecom operators are catching up
Although it still ranks first in the industry, Alibaba Cloud's performance growth continues to slow.
In the first quarter of 2016, Alibaba Cloud's revenue growth rate reached 175%, another record high. However, looking at 2016 as a whole, the growth rate was 138%.
Looking at the data for the next six fiscal years, Mustang Finance found,In 2017-2022, Alibaba Cloud's revenue growth rates were 121%, 101%, 84%, 62%, 50%, and 23%, respectively.
According to the latest financial report, Cloud Intelligence Group as a whole grew 3.5% year on year in fiscal year 2023 and 24% year on year after adjustment.
Regarding the reason for the slowdown in Alibaba Cloud's growth rate, Zhang Yong once said that, first, Internet industry companies, which are currently the main players in going to the cloud, are generally on a slowing trend in development, which has curtailed the development of cloud business; second, the current relative economic downturn in the overall economic environment has further dampened the demand for enterprises to go to the cloud.
However, Tianyi Cloud, Mobile Cloud, Unicom Cloud, etc. which are also in the cloud business did not see a slowdown in growth. The revenue of the above three companies increased year-on-year in 2022, respectively107.5%, 108.1%, and 121%.
According to Shen Meng, director of Chanson Capital,Big customers such as government agencies and state-owned enterprises usually choose the top three telecom providers or cloud service providers such as Huawei. Alibaba Cloud is mainly for ordinary individual users and private enterprises. Currently, the economy is slowing down and the purchasing power of private enterprises is declining, putting pressure on Alibaba Cloud, Baidu Cloud, etc.
Looking at Alibaba Cloud's old rival Tencent Cloud, Mustang Finance combed through and found that its growth rates in 2019-2022 were 87%, 51%, 34%, and 24%, respectively. The situation is similar to Alibaba Cloud.
Furthermore, Zhang Yi also believes that the slowdown in Alibaba Cloud's growth rate is not only due to market factors; objectively, it may also be a strategic adjustment. For Alibaba Cloud, which has already decided on an IPO plan,Appropriate slowing down at an early stage will still have some strategic help for the growth of sustainable financial reports in the future.
Although the growth rate has slowed, Alibaba Cloud has been very active in making strategic adjustments to its business. On April 26, at the 2023 Alibaba Cloud Partner Conference, Alibaba Cloud announced the largest price reduction in history: the reduction was large and covered a wide range of topics. Prices for core products, including computing, storage, networking and security products, were reduced by 15%-50% across the board, effective May 7. Be the first to start a price war.
Zhang Yi pointed out that this price war is not surprising. Market activity began to surge after the epidemic, and at the same time, a new technological revolution represented by the AI model is coming. In this context, no matter how the front-end changes, the back-end cloud is always the infrastructure. Therefore, from this perspective, infrastructure can only reap the dividends brought by greater technological changes if it achieves a better cost performance ratio. This should be the most critical point.
After Alibaba Cloud, Tencent Cloud also announced that some product lines had dropped as high as 40% on May 16, while Mobile Cloud claimed that some product lines had dropped as high as 60%.
3. Who will share the capital feast?
Alibaba Cloud has high expectations from the market, and its valuation is gradually being looked up to by financial institutions.
In 2016, Wall Street valued Alibaba Cloud at 39 billion US dollars; in 2018, Morgan Stanley analysts gave Alibaba Cloud a valuation of 67.094 billion US dollars, similar to Amazon's AWS valuation ratio; in May 2020, J.P. Morgan gave a valuation of 77 billion US dollars. Two months later, Goldman Sachs raised the valuation to 93 billion US dollars.
In August 2020, after Alibaba released strong fiscal quarter results, many institutions such as Goldman Sachs and J.P. Morgan raised Alibaba Cloud's valuation to more than 100 billion US dollars, of whichGoldman Sachs raised Alibaba Cloud's valuation to 123.8 billion US dollars (currently about 870 billion yuan).
According to Alibaba's financial report, Cloud Intelligence Group will be completely spun off and listed independently within the next 12 months.
An 870 billion yuan capital feast is about to open. Who can get tickets?
Cloud Intelligence Group is not yet completely independent of Ali Group. In Ali's latest performance announcement, only the operating data of the six major business groups was released, but the specific shareholding structure was adjusted and how it was adjusted has not yet been disclosed.
On Alibaba Cloud's side, Mustang Finance looked through Alibaba's 2022 fiscal year report and found that its main body was Alibaba Cloud Computing Co., Ltd., itsIt is controlled by Alibaba Group through a contract arrangement with Zhejiang Alibaba Cloud Computing Co., Ltd. (“Zhejiang Alibaba Cloud”).
Alibaba Group, on the other hand, indirectly holds 100% of Zhejiang Alibaba Cloud through an intermediary holding entity.
On July 29, 2015, Alibaba Group announced a strategic capital increase of 6 billion yuan for its Alibaba Cloud strategy for international business expansion, research and development of basic and forward-looking technologies in the fields of cloud computing and big data, and the construction of the DT ecosystem.
However, according to the National Enterprise Credit Information Publicity System, the shareholder of Alibaba Cloud Computing Co., Ltd. is Hangzhou Zhenxi Investment Management Co., Ltd., with a shareholding ratio of 100%. According to the Ai Enterprise survey,The company is indirectly owned by Wu Zeming, Jiang Fang, Shao Xiaofeng, Zhang Yong, and Zheng Junfang, each holding 20% of the shares.
Among them,Zhang Yong, Zheng Junfang, Wu Zeming, and Jiang Fang are also members of the board of directors of Cloud Intelligence Group. There is no need to go into detail; Zhang Yong is also the chairman and CEO of Alibaba Group; Zheng Junfang is now also the group's chief risk officer, chief platform governance officer, and chief client officer; Jiang Fang, as Alibaba's partner and one of the founding employees of Alibaba Group, is currently the group's chief human resources officer; and Wu Zeming is currently the chief technology officer of Alibaba Group.
As for DingTalk, the actual controller after its penetration was still DingTalk (Singapore) Co., Ltd.
It is worth noting that before the spin-off, Ali plannedBringing in external strategic investors for Cloud Intelligence Group through private equity financing.
Regarding what kind of investors can go both ways with Alibaba Cloud, Zhang Yi said, “Alibaba Cloud's current spin-off and independent listing may be attractive in the futureResource-based capital with no strong support for business. As a provider of cloud services, Alibaba Cloud will further develop into the creative industry, so if strategic capital enters,I believe that maybe a central enterprise background or a state-owned asset background would be the preferred direction.”
Yu Baicheng, chief researcher at Hou Xue Research, believes that what is more important is that the listing will bring capitalized epitaxial growth to Alibaba Cloud. For example, introducing new strategic shareholders after the spin-off,In particular, state-owned capital, industrial capital, and overseas capitalA new shareholder governance structure was formed, and various shareholders and Alibaba Cloud promoted the digital business of the industry, thereby breaking through development bottlenecks.
“Although Alibaba Cloud entered the market late, it grew rapidly based on Ali's technological advantages in cloud computing. Therefore, in order to go public independently, it is necessary to expand the revenue scale from non-Ali sources, and cloud computing is an important information technology infrastructure in the future.Strategic industrial capital or large financial investorsThey will all participate actively.” Zhang Yi thinks,”Judging from the current arrangement for the independent development and listing of various sectors of Ali, it is also aimed at dissuading doubts about Ali from the outside world, so it is not ruled out that state-owned assets will be introduced in the form of mixed ownership.”
Zhang Yong once said something profound: “Fix the roof on a clear day and make plans in the best of circumstances.” After the haze has evaporated, Alibaba Cloud is still number one in the industry. After being dormant for 3 years, it also began planning to go public, which just confirmed Zhang Yong's original judgment.
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