According to online reports, Alibaba Cloud's department has begun a round of layoffs, which may lay off about 7% of employees, saying it is to prepare for the division's spin-off and final IPO.
According to reports on the Internet, a person familiar with the matter said that Ali provided severance payments to employees or transferred them to other departments of the company. The moves are aimed at streamlining the business, and Alibaba aims to completely split it into a separate company within a year.
Analysts have analyzed that the capital saved by Alibaba by cutting 7% may not be enough to offset the department's profit drag caused by price cuts and fee reductions, nor is it enough to reach consensus Ebita, which increased 51% year-on-year after the 2024 fiscal year adjustment. Although cloud profit expectations fell 15% in the three weeks ending May 23, we think cloud revenue increased at least 15% after layoffs compared to a year ago, which could help the department meet profit expectations.
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