[1/2]3D printed clouds and figurines are seen in front of the Alibaba Cloud service logo in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration Acquire Licensing Rights
Nov 16 (Reuters) – China’s Alibaba Group (9988.HK), on Thursday scrapped plans to spin-off its cloud unit citing uncertainties created by U.S. export curbs on chips used in artificial intelligence applications.
The announcement came alongside in-line second-quarter revenue posted by the Chinese e-commerce giant, which in March announced plans to carve out the unit as part of the biggest restructuring in its 24-year history.
The company also put on hold plans for an initial public offering of its Freshippo groceries business but said it would prepare external fundraising for its international digital commerce group arm.
Alibaba’s U.S.-listed shares were down 8.4% in premarket trading.
“The recent expansion of U.S. restrictions on export of advanced computing chips has created uncertainties for the prospects of Cloud Intelligence Group,” Alibaba said.
Alibaba’s ex-group CEO Daniel Zhang abruptly quit just two months after concentrating his focus on cloud computing.
The company then appointed Eddie Wu, one of Alibaba Group’s co-founders and long-time lieutenant of former chief Jack Ma, as both CEO of Alibaba and the cloud unit.
Regulatory filings also revealed on Thursday that Ma’s family trust plans to sell 10 million American Depository Shares of Alibaba Group Holdings for about $871 million.
Alibaba posted second-quarter revenue of 224.79 billion yuan ($31.01 billion), in line with the 224.32 billion expected by analysts, LSEG data showed.
China’s economic recovery has been uneven. While the industrial and the retail sectors have performed better than expected, the crisis-hit property sector has weighed on consumer confidence.
Alibaba asked merchants to price aggressively during its Singles Day festival as it takes on competitors such as Douyin and PDD Holdings’ (PDD.O) Pinduoduo who have been selling lower-cost products year-round.
($1 = 7.2481 Chinese yuan renminbi)
Reporting by Akash Sriram in Bengaluru and Casey Hall in Shanghai; Editing by Sam Holmes and Arun Koyyur
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