SHANGHAI: Alibaba, the Chinese e-commerce giant, announced on Thursday the cancellation of a planned cloud service spinoff, revealed earlier this year, citing US chip restrictions.
The decision was disclosed alongside the company’s third-quarter 2023 results, which demonstrated a 9 percent year-on-year increase in revenue. Despite facing challenges in recent years and amid a broader economic slowdown, Alibaba’s Q3 performance met market expectations.
CEO Eddie Wu commented on the positive quarter, stating, “Alibaba Group delivered a solid quarter, marked by renewed momentum and energy across multiple businesses as a result of our strategic reorganization,” referencing a significant restructuring plan unveiled earlier in the year. The restructuring involved dividing the group into six distinct entities, each capable of pursuing independent funding through public listings.
However, in the today announcement, the company revealed the abandonment of the spinoff for one segment of its business, the Cloud Intelligence arm, citing “the recent expansion of US restrictions on export of advanced computing chips.” Alibaba stated that a full spin-off of the Cloud Intelligence Group may not achieve the intended enhancement of shareholder value.
For the quarter ending in September, Alibaba reported sales of 224.8 billion yuan ($31 billion). This figure marked a decrease from the previous quarter’s 234.1 billion yuan.