Business Blog Posts

Alibaba.com, the listed unit of Alibaba Group, which is 40 percent owned by Yahoo Inc (YHOO.O), operates an e-commerce website that links Chinese small businesses looking to sell their goods to overseas buyers, which makes its turnover sensitive to the performance of the world's major economies such as the United States and Europe, which are struggling with crippling debt crises.

"The global economy, especially in Europe and America, we think will turn weak," said Jonathan Lu, chief executive of Alibaba.com.

Alibaba.com said revenue from its China Gold Supplier package was up 20 percent at 921.19 million yuan in the quarter, contributing 56 percent to total revenues, it said in a statement on the Hong Kong stock exchange.

But paying members fell 2.1 percent from the previous quarter to 832,469. Its China Gold Supplier package and Global Gold Supplier package saw a 3.7 percent and 3.2 percent fall in subscribers, respectively, as the company tried to control the quality of subscribers.

"If you look at their growth rate next year, it will probably slow down as well," said Dick Wei, an analyst of JPMorgan in Hong Kong. "I think the negative outlook of the macro-economy will also affect them as well."

Net profit in April-June jumped to 464.55 million yuan ($99 million) from 362.96 million yuan a year earlier. That beat the average forecast of 420.4 million yuan from five analysts surveyed by Thomson Reuters I/B/E/S.

Revenue grew 19 percent to 1.62 billion yuan. Revenue from its international marketplace rose 20 percent to 948.97 million yuan.

Late last month, Alibaba Group struck a deal with Yahoo and Softbank Corp (9948.T) over a transfer of Chinese e-payments unit Alipay to group founder and chief executive Jack Ma.

Alibaba.com shares were up 2.69 percent before the results. They have lost about 35 percent this year, underperforming the Hang Seng Index .HSI, which is down 15 percent.

(Reporting by Melanie Lee and Lee Chyen Yee; Editing by Will Waterman)

The shares were 6.5 percent firmer at 23.61 euros by 3:16 a.m. EDT. The stock closed down 15 percent at 22.18 euros in Paris on Wednesday.

SocGen's bonds weakened further, however. Spreads on its bonds due in 2016 widened by 45 basis points to the benchmark swaps-plus 260 basis points. The cost of insuring its debt against default also rose, with 5 year Credit Default Swaps 16 basis points wider at 350 basis points.

Rumors about a French sovereign debt downgrade, an expanded bailout for Greece that would hurt French banks, and a government bailout of SocGen, pulled shares of France's second-largest bank down in the heaviest volume since the 2008 financial crisis.

SocGen CEO Frederic Oudea dismissed the rumors as "absolutely rubbish" in an interview with CNBC television after the market closed, adding rumors about a downgrade of France's sovereign debt rating were "very strange" and contrary to the reality of the situation.

In an interview with Le Figaro newspaper published on Thursday, Oudea said the bank had come under "a series of attacks" in the stock market.

He added that the bank had not experienced any losses in particular in the past few days and that its results to date were satisfying.

"The market is an echo chamber: it amplifies good news, as well as bad," Oudea told France Info radio. "People are scared, so the tiniest information touches off irrational fears.

"To our clients, we have to tell them that these rumors are baseless and that they can have confidence in Societe Generale. They should not listen to this stuff, which is totally baseless."

This is the latest stumble for SocGen, which was the weakest of the major French banks in Europe's stress tests of its lenders last month.

Investors have speculated it may have to raise about 3 billion euros to reach new global capital standards if the euro zone crisis worsens.

The bank -- still trying to rebuild its credibility after the Jerome Kerviel rogue-trader scandal in 2008 in which it lost 4.9 billion euros ($6.90 billion) -- also issued a profit warning last week.

Rival French banks also fell sharply on Wednesday, with BNP Paribas (BNPP.PA) and Credit Agricole (CAGR.PA) closing 9.5 percent and 12 percent lower. The three top French banks lost nearly 10 billion euros in market value.

BNP was 1.3 percent firmer at 3:32 a.m. EDT, while Credit Agricole was up 5 percent.

SocGen stock had lost 45 percent over the past 2 1/2 weeks, while BNP had dropped 29 percent and Credit Agricole had plunged 38 percent.

"It is not the moment to sell, you have to calmy hold on," Oudea told France Info. "All the bank shares are very low right now."

($1=.7099 Euro)

(Reporting by James Regan and Leila Abboud in Paris and Natalie Harrison in London; Editing by Dan Lalor and Andrew Callus)

Major European markets also looked set to draw some comfort from the U.S. futures bounce, with financial bookmakers predicting British, French and Germany stocks would open up as much as 1.6 percent.

The Australian dollar, often a measure of investors' willingness to take risks, bounced above $1.02 as Asian equities pulled back from their lows, suggesting traders and investors were being nimble rather than selling with blinders on in the face of risks to global growth.

Trading was whippy and positions were built, slashed and then rebuilt within an hour. The euro crept higher, but Europe's devolving crisis was too complex and disturbing to make any long-term bets.

Fast-moving rumors about a sovereign debt downgrade of France as well as talk doubting the health of French banks swirled in Europe caused the biggest widening in the benchmark index of European credit default swaps on Wednesday since the credit crunch in 2008.

The three major rating agencies later reaffirmed France's AAA rating, and said its outlook was stable, but markets remain concerned that French banks are among the most exposed to a worsening of Europe's government debt crisis.

European policymakers have been struggling to keep the euro zone's government bond markets from being savaged, but Wednesday's price action suggested the problems may be rapidly spreading to the private sector.

"The market is in a bit of heat-seeking missile mode looking for vulnerabilities around the world, and Europe is obviously in its sights at this point in time," said Grant Turley, senior strategist at ANZ in Sydney.

GETTING DOMESTICATED

As S&P 500 futures firmed, Japan's Nikkei share average trimmed initial losses of 2.2 percent and was down 0.7 percent by midday, but still not far from a five-month low hit on Tuesday.

Carmakers and machinery makers fell as investors continued their shift into domestic-demand related and defensive sectors such as pharmaceuticals and retail from cyclicals, on worries over the state of the global economy and the strong yen.

Expectations the Bank of Japan would continue to step into the market to buy Nikkei exchange traded funds also limited the selloff in Tokyo.

By 1 a.m. EDT, S&P futures were up 1.4 percent after the cash index tumbled 4.4 percent overnight on Europe's crisis and fears that the U.S. economy could slide back into recession.

Tuesday's intraday low at 1,101 is major support for the index since it is also the 38.2 percent retracement of the 2009-2011 rally.

The benchmark MSCI Asia Pacific ex-Japan stocks index also pared early losses and was down 0.3 percent by midday, helped by outperforming telecommunications and consumer-related shares.

The index has fallen 13 percent so far in August, in line with the all-country world index, suggesting investors were not being so discriminating in the equity sell-down.

Institutional fund managers were mostly confident about Asian assets and some have been trying to position their portfolios to gain when equities bounce and bond yield spreads over Treasuries tighten.

Khiem Do, head of Asian multi-asset with Baring Asset Management in Hong Kong, said some Asian mutual funds were seeing redemptions but nothing significant.

"From the perspective of long-term institutional investors, if anything there are more people on the buy side than on the sell side. Valuations are very attractive at the moment especially in the case of Asia," Do said.

AUSSIE BOUNCE

The euro bounced as equities recovered from their lows, but remained vulnerable, especially against the yen and Swiss franc.

The euro was at $1.4225, up 0.3 percent on the day, though locked within a tight trading range by the debt crisis in Europe and the U.S. economic slowdown.

"I think the EU debt problem is far bigger a concern for Asia than the U.S. downgrade as investors are continuing to buy U.S. Treasuries anyways," said Francis Cheung, senior strategist with Credit Agricole CIB in Hong Kong.

"I think we can see some rebounds here and there, but overall the sentiment is still very cautious."

High-yielding currencies were popular, with the Australian dollar up 0.9 percent to $1.0240, holding above Tuesday's drop to below parity but well off from $1.10 where the currency started the month.

Commodities were a mixed bag, with copper prices jumping and oil slipping, while precious metals slid after a margin increase by the CME Group on gold futures and the equities comeback.

Spot gold prices were down 0.7 percent to $1,781.89 an ounce after earlier hitting an all-time high of $1,813.79. The undisputed safe haven has risen 11 percent so far this month and is up 27 percent in 2011.

The CME Group raised maintenance margins for trading Comex 100 Gold Futures by 22.2 percent, effective after the close of business on Thursday. The margin hike was not expected to be a big obstacle to further gold gains.

"It's difficult to see a great deal of selling, because we are in very, very volatile and uncertain times when markets are moving very violently. Gold has proven too much of an attraction as an alternative investment and the margins may not have as much influence," said Darren Heathcote, head of trading at Investec Australia.

Three-month copper on the London Metal Exchange rose 2.7 percent to $8,828 a tonne, after losing 1.6 percent in the last session.

Oil futures fell, with U.S. crude for September delivery down 0.4 percent at $82.58 a barrel, though well off Tuesday's intraday low of $75.71. Prices had jumped overnight after an unexpected decline in U.S. oil inventories.

(Additional reporting by Ian Chua and James Regan in Sydney and Swati Bhat in Singapore; Editing by Kim Coghill)

Trading was once again marked by sharp moves on heavy volume. For a fifth straight day, the Dow industrials fluctuated in a range of more than 400 points.

"What you're seeing is a very short-term, direction-oriented market," said Eric Kuby, chief investment officer of North Star Investment Management Corp in Chicago.

Worries about the strength of French lenders, including Societe Generale, triggered a selloff in European and U.S. banks. Rumors about SocGen's financial health, which the bank denied, sent its shares tumbling 14.7 percent.

An index of European banks dropped 6.7 percent and the KBW index of U.S. bank stocks slid 4.9 percent as fear grew of a possible contagion of any French crisis. Bank of America Corp lost 10.9 percent to $6.77 and Goldman Sachs slid more than 10 percent to $110.34.

The Dow Jones industrial average lost 519.83 points, or 4.62 percent, to 10,719.94. The S&P 500 fell 51.77 points, or 4.42 percent, to 1,120.76. The Nasdaq Composite dropped 101.47 points, or 4.09 percent, to 2,381.05.

Wednesday's drop came a day after stocks rallied on the Federal Reserve's pledge to keep interest rates near zero for at least two more years.

Even after Tuesday's snap-back rally, the S&P 500 is down almost 18 percent from its 2011 closing high set April 29.

The losses came against the backdrop of recent weak U.S. economic data, the United States losing its triple-A credit rating from Standard & Poor's and the inability of lawmakers to address worries that another recession may be on the way.

About 15.1 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, almost double the year's estimated daily average of 7.8 billion.

Volume once again spiked in the last hour of trading, and the market closed near its session lows. Of late, overleveraged investors with losses on their books have been forced to sell shares near the end of the day.

"Between 3 and 3:20 (p.m.) you have people getting margin calls, and on days like today there's some nervousness about what those calls will look like," said Andrew Frankel, co-president of Stuart Frankel & Co in New York, referring to the volatility of the final hour of trading.

Slides in the value of stocks may increase the cash needed in margin accounts, which can spark further selling.

Dow component Walt Disney Co dropped 9.1 percent to $31.54 a day after the entertainment company's quarterly results failed to reassure investors that it could do well in a weak U.S. economy.

After the closing bell, Cisco Systems Inc's shares jumped nearly 12 percent after its quarterly results edged past Wall Street's scaled-back expectations.

Declining stocks outnumbered advancing ones during the regular session on the NYSE by a ratio of more than 8 to 3, while on the Nasdaq, almost five stocks fell for every one that rose.

(Reporting by Rodrigo Campos; Additional reporting by Ryan Vlastelica; Editing by Kenneth Barry)

The comments were the clearest sign yet that Murdoch's son James may be sidelined after a phone hacking scandal swept its UK newspaper unit, which reports to him.

Murdoch made the comments on a conference call on Wednesday to discuss News Corp's fourth-quarter financial results. He said he and Chief Operating Officer Carey have "full confidence" in James Murdoch.

Media experts and analysts have wondered for several years who would replace Murdoch once he stepped down. Speculation has centered on his children as well as executives outside the family.

Murdoch also said the media company's board wants him to remain CEO after the hacking scandal raised questions about his leadership.

The big question on the minds of many people is whether Murdoch would continue to supervise News Corp after fresh revelations of the hacking charges, which have resulted in several high-profile departures from the company and the arrests of 12 ex-staffers.

Murdoch told investors on a conference call that the board gave him its backing.

"The board and I believe I should continue in my current role as chairman and CEO, but make no mistake, Chase Carey and I run this company as a team, and the strength of that partnership is reflected in our improved results," Murdoch said. "I'm personally determined to put things right when it comes to the News of the World."

Murdoch also said that he was disappointed that the company had to drop its bid for full control of UK satellite TV company BSkyB after the phone hacking scandal eroded News Corp's chances of getting approval for the deal.

News Corp's profit rose, at least by one measure. The company, which owns broadcaster Fox and newspapers including the Wall Street Journal reported a profit from continuing operations of $982 million, up from $902 million a year ago.

Its net income fell to $683 million, or 26 cents a share, down from $875 million, or 33 cents a share, a year ago.

Revenue rose 11 percent to $8.96 billion, helped by advertising sales and fees at Fox TV and its cable networks.

Operating income at its cable network unit rose 12 percent, helped by a 23 percent rise in advertising revenue at its domestic channels and a 30 percent rise in affiliate fees at its international cable channels. Advertising at its Fox broadcast business also rose by 7 percent.

Movie profits rose 53 percent thanks to animation hit "Rio" and home entertainment sales of "Black Swan" and "The Chronicles of Narnia."

"They were pretty good numbers," said Collins Stewart analyst Thomas Eagan.

Murdoch said the company would consider expanding its share buyback if the stock continues to be undervalued.

(Reporting by Yinka Adegoke. Editing by Robert MacMillan)