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Alibaba update

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It was a short while ago (last Nov) Alibaba did its high profile IPO in Hongkong. Now it’s back in the news again. Don’t get me wrong, Jack Ma (Ma Yun), the founder and Chairman of Ali, was always in the news. I remember a few years ago (when the company was private) he said Ali pays 1 millions Yuan everyday, that’s not a small number and people thought Mr. Ma was bragging. Oh, well, bragging or not. Alibaba’s IPO was very successful, and it created a few hundred millionares (stock option holders) in its employee bases, from what I read last Oct.

Fast forward to March 2008. It reported a good quarter but stock continued to drop (see Sramana Mitra at Seekingalpha). And there is a rumor about class action lawsuit coming (news in Chinese).

Alibaba 1688 stock chart
(Alibaba 1688.HK 6 month stock chart, full size pic here).

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Lessons Learned from NINE

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1) Don’t jump into an IPO on its first day. Do some research if you really want to jump.

2) A controlling shareholder is also the CEO: usually not good for small shareholders.

3) One customer (Chinese goverment), one product (custome declaring software), be very worried.

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B2B Developments in China

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B2B, business to business, was a popular concept in dot com era. The idea was to connect the companies (suppliers, OEM, vendors…) using B2B software. In those days, there are a few B2B software companies such as Commerce One flied high. But B2B never grew as big as people dreamed in the US. On the other hand, Alibaba, the China company connecting Chinese manufacturers with foreign buyers, was very successful. The bar raised again recently as more players joined the party. One of them, is the Ninetowns (NINE), the company provides software for importing and exporting in China. The following is I saw from Andy Yu’s blog (in Chinese, see below).

We all know in business especially foreign trade, trust is very important. Essentially TooToo is creating its own rank system for the Chinese exporters. They have the raw data when providing the software and services for Chinese companies, and the rank is based on those data. When foreign buyers see an exporter is certified by TooToo, or “China Qualified Supplier”,  they can worry less about the quality etc. TooToo (Ninetowns) essentially is trying to create a credit report for the Chinese suppliers. Continue reading B2B Developments in China

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Basics for Investment

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I happened to see this “Investment 101” from forun web site, a very small (boutique) research firm. Wish I had read it before jump into market 3 years ago. Oh well, I know even if I read it, I would forget it and make the same mistakes. A lot times we have to learn the lesson the hard way.

It’s an interesting story to find this research firm. So I was listening to the conference call of Ninetowns, the stock I bought at its IPO and bought it again today. An analyst from forun called in and talked in English with a heavy Chinese accent. Sometimes when he got stuck, he used Mandarin with strong Hunan accent . The CEO of Ninetowns can not speak English. So they talked in Mandarin. Another SVP of Ninetowns did the translation. There are only two analysts called in for the questions. The other guy Dick Wei from JP Morgan, is also ethnic Chinese. Note JP Morgan was the underwriter of its IPO in Dec 2004.   

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Trade of the Day

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I sold the remaing Symantec (SYMC) stocks today and I bought an old stock for me: the Ninetown Digital (NINE, recently changed name to Ninetown Internet). Here are my reasoning.

Symantec moved up quite a bit in past serveral months. It reported good earning in Q2, but missed a penny in Q3 due to some weakness in Europe. I think it’s a solid company and may do well in Q4. Note enterprise software companies usually do more sales in Q4 because of end-of-year spending (so is the Wall Street expectation, so don’t expect a big pop). Another reason is Symantec is just too big for me to understand, its main business is from enterprise (storage, security, compliance etc), not just the Norton Anti Virus or Internet Security for individual customers. By the same token, as the world No. 5 software company (by market capital, behind Microsoft, Oracle, SAP and Adobe), its stock just does not move too much compared to smaller software companies. I think it’s good for mutual funds or people who just want to get average return without doing much homework. Continue reading Trade of the Day