AP: A "Dragon and Tiger Fight" is on the show

Absrtact: January 30, the Associated Press recently published the article that in today's China market, a dragon Tiger fight is playing. Sales are not up to the expected share price Alibaba reported yesterday, the third quarter of 2015, Alibaba revenue of 4.22 billion U.S. dollars,

January 30, the Associated Press recently published in the Chinese market today, a "Dragon Tiger Fight" of the play is staged.

Revenue not up to expected share price fall

Alibaba's earnings for the third quarter of 2015 were $4.22 billion trillion, below analysts ' estimated $4.42 billion trillion, according to reports released yesterday. Based on non-US GAAP, each share of US depository shares has been diluted to $0.81 trillion, much higher than analysts ' expected $0.74 trillion.

In addition, Alibaba's recent dispute with the State Administration for industry and commerce has aroused foreign concern, Alibaba investors are commissioned by the U.S. law firm Pomerantz LLP to investigate the matter. Affected by the news, in the trading on January 29, Alibaba shares fell 9.14 U.S. dollars per share, fell to 89.31 U.S. dollars, a decline of 9.8%, the market loss of more than 22 billion U.S. dollars.

Report and Counterattack

Chinese regulators issued a scathing report in Wednesday that targets one of China's biggest corporate stars. The report accuses the electric giant Alibaba Group (NYSE: BABA) of not doing enough to prevent fakes from being sold on the group's major websites. Instead of being intimidated, the Alibaba Group countered by saying that a government official was biased against the group and behaved improperly. In China, this overt confrontation is almost unheard of.

The timing of the report is even more questionable. China's State Administration for Industry and commerce, which wrote the report last July after talking to the management of Alibaba Group, postponed the release time to avoid affecting the group's listing on the New York Stock Exchange. Alibaba Group, in its IPO prospectus, disclosed that the fake problem was one of the "risk factors" it faced, but did not disclose any information about the regulatory investigation before it raised $25 billion in the IPO last September.

The controversy dragged Alibaba Group shares down about 4% per cent in the New York market in Wednesday, at $98.45 trillion. Meanwhile, Yahoo, which holds a 15% stake in the group, is also under threat. The fall in Alibaba Group's shares has reduced the value of Yahoo's stake by more than $1 billion trillion, and just a few hours ago, Yahoo announced it would divest its stake later this year.

"If [Yahoo] splits its stake at the end of the month, there is nothing to worry about." "Martin Pyykkonen, an analyst at the brokerage Rosenblatt Company (Rosenblatt), said. "But if Alibaba's share price falls by 20% in the six months from now, then there will be problems." ”

US ace law firm launches investigation

Alibaba investors are commissioning a US law firm Pomerantz LLP to investigate the matter.

The survey concerned whether Alibaba and its managers and/or directors violate the United States Securities and Exchange Act of 1934 10th (b) and 20th (a).

Founded by the late Abraham L. Pomerantz, known as the Godfather of collective action, Pomerantz is recognized as one of the leading firms in the field of corporate, securities and antitrust litigation, with offices in New York, Chicago, San Diego and Florida State.

The Fake and the truth

Alibaba Group's fake problem is not groundless, but there are relevant documents to prove. Between 2008 and 2011, the so-called "notoriety market" (notorious CMC) report mentions the Alibaba website and Taobao every year, although the two sites were removed from the report in the following years.

But the report, published in Wednesday, represents the first time the Chinese government has singled out the leading "stars" in the country's internet industry, a sector that government leaders desperately want to grow.

"It seems that the aim of the report is to" keep Mr Ma (Weibo) Wedbush, "said Gille Ruria, an analyst at Wedbush Nomura Securities.

"Perhaps China's State administration for industry and Commerce wants to state that the agency is not just targeting foreign companies, but it is also targeting domestic companies," he said. "Lardy Nicholas, a Chinese expert at the Peterson Institute for International Economics (Peterson Cato for Analysys Economics), said. "What could be better than criticizing someone at the top of the food chain?" ”

China's State administration of industry and Commerce has accused Alibaba Group of allowing "illegal advertising" to mislead consumers into believing false information about low prices and other details. It also alleges that some of Alibaba's employees received bribes and accused the group of failing to deal effectively with the fraud problem. The report said regulators and Alibaba Group would work together to improve the group's management, but did not disclose specifics of the rectification plan.

Alibaba Group reacted swiftly, accusing Hongliang, an official at the state administration of industry and commerce in charge of internet surveillance, of "procedural misconduct" and warned that it would file a formal complaint.

Alibaba Group, founded in 1999 by Ma Yun, is one of the earliest internet companies in China, and its IPO deal has made Jack Ma the richest entrepreneur in mainland China, with a net wealth of $25 billion trillion. In the AP's view, Alibaba Group has so far enjoyed a unique freedom from government control. But Nicholas Howson, a law professor at the University of Michigan and a practising lawyer in China, Nicolas Hausen that the Alibaba Group's counterattack may be testing its "autonomy" bottom line.

In a prospectus submitted last May, Alibaba Group said it had received notices in the past about third parties selling pirated products, fakes or illegal goods on its web site, and would probably still receive such notices in the future. But in any relevant document on the eve of the IPO, the group did not mention any government inquiries or forthcoming reports.

The crisis was detonated.

Sam Hamadeh, chief executive of IPO research firm PrivCo, said the report could bring the biggest crisis to Alibaba Group since its inception. Sham Hammad

Hamad said Alibaba Group must have known about the investigation because the government would require it to submit evidence in the course of its investigation and would negotiate with its management and lawyers during the group's draft IPO prospectus. For example, if an American company has been investigated by the U.S. Department of Justice, the company should have disclosed the information in its annual report.

The AP said the survey would also "advertise" one thing: Alibaba Group is not the "darling" of the Chinese government.

"Chinese companies can be divided into two categories: those blessed and supported by the Government, and those that are not blessed and supported by the government." "said Hamad. If Alibaba were to disclose investigative information in its prospectus, he believes, perhaps the IPO deal would move in another direction. "There is no doubt that public opinion will begin to change (if the relevant information is disclosed) and there will be questions in the roadshow," he said. Even for an American company, this is the case. ”

Reena Aggarwal, a professor of finance at Georgetown University's McDonough Business School, Rena Agavar the Alibaba Group and its underwriters may face prosecution if no significant information is disclosed in the prospectus.

Yahoo declined to comment, saying its company policy asked not to comment on Alibaba Group's business. Despite holding a large share of Alibaba Group, Yahoo has little say in its operations. Snow）