Home / Eco-Finance / Alibaba Group Holding Limited (NYSE:BABA) Urges Shareholders to Be Patient after Gloomy Outlook: CST Brands, Inc. (NYSE:CST), Media General, Inc. (NYSE:MEG)

Alibaba Group Holding Limited (NYSE:BABA) Urges Shareholders to Be Patient after Gloomy Outlook: CST Brands, Inc. (NYSE:CST), Media General, Inc. (NYSE:MEG)

Alibaba Group Holding Limited (NYSE:BABA) [Detail Analytic Report] has urged shareholders to have patience with newer initiatives after the firm announced lower than anticipated profit growth in its fiscal Q4, despite a 39% jump in revenue, WSJ reported. After announcing 85% increase in quarterly net income to 5.37 $1.12bn, which came in below analysts’ estimates, Joe Tsai, vice chairman of Alibaba stated that it took seven years for the firm’s Taobao Marketplace to earn meaningful profit. History teaches them that it pays to be patient, Tsai added. According to Tsai, new initiatives typically take five to seven years to grow. Since its blockbuster $25 billion IPO in 2014, the Chinese e-commerce giant has been spending heavily to invest in areas from entertainment to media and on-demand services such as food delivery.

Alibaba has been facing rising rivalry from other Chinese firms in many business platforms. JD.com, for example, has been chipping away at market share of Alibaba, with its revenue growth outpacing Alibaba for the previous six quarters, while Tencent has been gaining market share in mobile payments with its WeChat Pay, a direct rival to Alipay, a mobile payment app of Alibaba. Tsai gave insight as to how the firm views the stages of its various businesses, ranging from the current core operations such as marketplaces like Tmall and Taobao to emerging businesses that are starting to pay off like cloud computing.

Tsai stated that longer term bets will take years to come to profitable fruition. The ability to remain patient is a competitive advantage, Tsai added, referring to those longer-term initiatives. Tsai didn’t disclose on which businesses fell into this category. In an effort to revitalize investors, Maggie Wu, CFO stated that Alibaba would start to provide greater transparency on its businesses by introducing annual revenue guidance and releasing new business cost structures and margins. Henry Guo, analyst at ITG Investment Research stated that should be a big positive for the stock. The more visibility, the more comfortable shareholders feel about the firm.

Chairman and Chief Executive of CST Brands, Inc. (NYSE:CST) [Detail Analytic Report], Kim Lubel commented during first quarter earning call that they had a strong Q1 led by impressive improvements in retail merchandise sales and gross profits. US merchandise and services gross profits grew by 25% over the Q1 of 2015 on increased sales and margins. Their Canadian stores grew merchandise and services gross profits by 10%, excluding the impact of foreign currency exchange, with an impressive 6% increase in comparable store sales.

Lubel added they showed continued strength in fuel gross profits in the Unites States, as a result of a favorable fuel margin environment and their continued fuel pricing optimization initiatives. They also executed on their organic and acquisition growth plans with the addition of 173 stores to their network, including the 165-store Flash Foods network. CST Brands announced earnings of $19 million in its first quarter. The firm reported that it had profit of 24 cents a share. Earnings, revised for non-recurring costs, came in 27 cents a share.

The first quarter results beat Wall Street anticipations. The average estimate of experts polled by Zacks Investment Research was for earnings of 24 cents a share. CST Brands declared revenue of $2.03 billion in the quarter, also beating Street forecasts. According to Zacks, analysts have expected $2.02 billion. Shares of CST have plunged 7.5 percent since the starting of the year.

Media General, Inc. (NYSE:MEG) [Detail Analytic Report] declared a loss of $26.2 million in its Q1. The Virginia-located firm reported that it had a loss of 20 cents a share. Earnings, revised for costs related to mergers and acquisitions and restructuring costs, came in 15 cents a share. Media General announced revenue of $343.5 million in the quarter. For the second quarter completing in July, Media General revealed that it expects revenue in the range of $361 to $375 million. Shares of Media General have soared roughly 8 percent since the starting of the year.

Vincent L. Sadusky, Chief Executive Officer of Media General commented on the results that they commenced this historic year by delivering terrific results in the period. Political advertising exceeded their expectations and helped drive 16% growth in total net revenues and 31% growth in Adjusted EBITDA. Excluding political, total net revenues grew 11% compared to the previous year. Additional key drivers for their performance were an increase in pay-TV subscriber fees and diligent expense management.

Looking forward, they remain focused on their operating initiatives and preparing for their combination with Nexstar. He is pleased with the progress they are making to unite their two strong local media firms in order to better serve viewers and advertisers.


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