Month: November 2007

By Posted on Posted in Stocks

After a Heady Debut, Shares Fall Back 18%; Questions of Value
By LORRAINE LUK – The Wall Street Journal – Nov 08, 2007

HONG KONG — Many investors took the money and ran, driving shares of Alibaba.com Ltd. down 17% a day after their debut, when they nearly tripled from their initial-public-offering price.

Analysts said the flagship business-to-business unit of Alibaba Group is likely to fall further on continued profit-taking for a while, as the stock is still overvalued.

• First-day pop: Shares of Alibaba.com, the business-to-business unit of its eponymously named parent, nearly tripled in their debut.
• Second-day slump: The stock fell 18% as investors booked profits amid valuation concerns.
• What’s next: More profit-taking, according to analysts.
• Quotable: ‘The valuation is still too expensive given its fundamentals, and it has priced in all the good news,’ said Peter Lai, a director at DBS Vickers Securities.

Shares of Alibaba.com, which connects small manufacturers in China and elsewhere with potential customers, fell to 32.60 Hong Kong dollars (US$4.20) yesterday, after touching a low of HK$31.90 intraday. By contrast, the benchmark Hang Seng Index rose 0.9%, or 270.8 points, to 29708.93. Alibaba.com was the third most actively traded stock on the Hong Kong exchange, with shares valued at more than HK$6.3 billion changing hands.

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“At above HK$30, Alibaba.com is trading at more than 200 times [forecast 2007 earnings]. The valuation is still too expensive given its fundamentals, and it has priced in all the good news,” said Peter Lai, a director at DBS Vickers Securities Ltd.

Yahoo Inc. of Sunnyvale, California, owns about 39% of Alibaba Group.

On its debut Tuesday, Alibaba.com closed at HK$39.50, up from its issue price of HK$13.50. The shares ended Tuesday trading at 320 times the company’s forecast 2007 net profit of 622 million yuan (US$83.4 million). That valuation was much higher than the price-to-earnings ratio of 52 at Nasdaq-listed rival business-to-business search engine Global Sources Ltd. and the 177 P/E ratio of Chinese-language Internet-search provider Baidu.com Inc.

Mr. Lai said he expects bargain hunters to sell the “overshot” Alibaba.com and use the funds to buy market laggards.

Alibaba.com raised US$1.5 billion in its Hong Kong IPO by selling 858.9 million shares. The company said Tuesday that it exercised an overallotment option, selling an additional 113.7 million shares at the IPO price of HK$13.50 to raise HK$1.53 billion more. The exercise of the option increased the funds raised from the IPO to US$1.7 billion.

Alibaba.com was founded by its chairman, Jack Ma, in June 1999. It leads the B2B market in China, with a 69% share, according to second-quarter trade-value numbers from technology-consulting firm Analysys International. Web-site tracker Alexa.com ranks it as the most visited import/export site.

Parent Alibaba Group’s other units include Taobao.com, the leading online-auction site in China, online-payment system Alipay, and Yahoo China, and it is one of the few Chinese Internet companies to establish a global profile.

Write to Lorraine Luk at lorraine.luk@dowjones.com

By Posted on Posted in Stocks

logo_alibaba.gifThe IPO of Alibaba.com hit the Hong Kong Stock Exchange Tuesday the 6th of November 2007 with a big increase over its initial offering price.

Alibaba.com is a spinoff from the Alibaba Group, the company that owns Alipay, Taobao.com and Yahoo China and is 40% owned by Yahoo.

Applications for shares in the IPO were 256x the amount of stock available, 858.9 million shares or 17% of the company. The IPO price was HK$13.50 ($1.74) per share.

As of 12:30pm local time (+8 GMT) Alibaba.com shares were trading at HK$35.75 ($4.60), an increase of 164% on the list price.

Yahoo is a big winner from the IPO, having obtained a 8.2% stake pre-IPO that went from a paper value of $720.89 million to $1.9 billion based on the 12:30pm price.

Alibaba now has a market cap of a rather staggering $23.24 billion, significantly more than the market cap of China’s biggest search engine, the NASDAQ listed Baidu on $14.05 billion.

By Posted on Posted in Marketing

I read this post at my friends’ blog Dave Duarte

The Marketing page on Wikipedia now includes a sub-section called: “Web 2.0 and Marketing New 4Ps”.

The original 4Ps concept idea was developed to help marketers manage the four most important aspect of marketing (Product, Price, Place, and Promotion). With the Internet and the Web 2.0, marketers have needed to adapt a broader perspective on these elements. Idris Mootee devised a “New 4Ps” model in 2001 to supplement the traditional marketing 4Ps.

Web 2.0 and Marketing New 4Ps
The original 4Ps concept idea was developed to help marketers manage the four most important aspect of marketing. With the Internet and the Web 2.0, marketers have needed to adapt a broader perspective on these elements. Idris Mootee devised a “New 4Ps” model in 2001 to supplement the traditional marketing 4Ps.[2] They are Personalization, Participation, Peer-to-Peer and Predictive Modeling.

  • Personalization: The author here refers to customization of products and services through the use of the Internet. Early examples include Dell on-line and Amazon.com, but this concept is further extended with emerging social media and advanced algorithms. Emerging technologies will continue to push this idea forward.
  • Participation: This is to allow customer to participate in what the brand should stand for; what should be the product directions and even which ads to run. This concept is laying the foundation for disruptive change through democratization of information.
  • Peer-to-Peer: This refers to customer networks and communities where advocacy happens. The historical problem with marketing is that it is “interruptive” in nature, trying to impose a brand on the customer. This is most apparent in TV advertising. These “passive customer bases” will ultimately be replaced by the “active customer communities”. Brand engagement happens within those conversations. P2P is now being referred as Social Computing and will likely to be the most disruptive force in the future of marketing.
  • Predictive modeling: This refers to neural network algorithms that are being successfully applied in marketing problems (both a regression as well as a classification problem).

By Posted on Posted in Domain Names

Thirteen years ago, Josh Quittner wrote an article in Wired that almost made me richer than Donald Trump.

He wrote about how many domain names were up for grabs, including McDonalds.com.

Inspired, I sat down and registered hundreds of them. I was about to hit the ‘buy’ button when my office mate persuaded me that it was somehow unethical. Persuaded, I only ended up buying one or two generic terms.

Shoot.

Anyway, a decade and a half later, boom over, domains persist. Many are worth a fortune, tens of thousands are worth a semi-fortune.

Why are they still worth so much?

For a long time, clueless surfers would type a word into the address bar of their browser, figuring it was some sort of magic search engine. Type “gloves” into the address bar of Safari, and yes, it will take you to www.gloves.com.

But Firefox and others are wising up and connecting that spot to the search engines. Type “gloves” into Firefox and you’ll automatically go to the number one result on Google. Research shows that the number of people who accidentally end up on these sites is going down. So why the value?

I’m going to argue that it comes from two things.

1. Commitment. Because there’s ony one “dot com” TLD and no serious contenders, there’s only one neighborhood for business online. You’re either on Fifth Ave. (or Rodeo Drive, your choice) or you’re not. If you build a site at mexicansugarskull.com, you’re making it really clear to the surfer that you care about this topic, that you’re here to stay and that you can be trusted.

2. Focus. Similar, but not quite the same. By having a domain that matches what you do, you are able to focus the attention of the surfer. They know what to expect before they get there, and you can spend less time explaining yourself. The web already offers too many choices–this way, your site doesn’t have to.

I think this can help lead us to some useful strategies. If you own domains:

* Reinforce the idea of commitment. Don’t use generic photos or standard layouts. The incremental effort to make your domain look like it sounds, to demonstrate your commitment through your actions, is very small, but worth it.

If you don’t own a domain that’s a perfect match (and that’s most of us):

* Make up for the fact that your domain is imperfect by using design, testimonials and other substantial cues to remind people just how committed you are.
* Don’t hesitate to create multiple domains for your efforts if you think it will help your visitors focus.

Over the last few weeks, Squidoo has launched a number of new domains to take advantage of this focus impulse: Squidbids, Squidvids and Squidwho, to name a few.

I’ve been amazed at how quickly people ‘get it’ when they visit each domain, and how productive the effort has been. The internet has taught people what to do when they see a domain. It’s not just an address, it’s the first bit of marketing.

One last bit of backward thinking: if you’re looking to start an online business, consider finding a great domain and build the business around it, not the other way around. If you subscribe to the snapnames newsletter, you can see which interesting domains are about to be sold for not much money. No guarantees as to how effective this service is, but it’s a neat way to think about what to build next.