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Alibaba ex-CEO’s cloud unit exit followed by 4% fall in shares

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After Daniel Zhang, the former CEO of China’s Alibaba Group, abruptly left the company’s cloud computing division on Monday, the company’s Hong Kong-listed shares dropped more than 4%.

In an internal letter to colleagues obtained by Reuters, Alibaba confirmed Zhang’s intention to leave the unit, with co-founder Eddie Wu taking over as interim CEO and chairman. Wu was officially given the position of group CEO on Sunday by Zhang.

According to research firm Canalys, with a 34% market share, the unit is China’s largest cloud provider.

As part of the restructuring of the company, it also contains DAMO Academy, Alibaba’s research division for chips and AI, which is scheduled to be spun off from Alibaba by May of next year.

Zhang had previously been running both the company and the cloud intelligence section simultaneously, and the company stated in June that he would step down from those positions to concentrate only on the cloud business.

Li Chengdong, president of the e-commerce-focused Haitun think tank in Beijing, said Zhang’s departure appeared to be a personal choice and occurred as Alibaba Cloud deals with tougher regulations, increased rivalry from China’s telecom companies, and Huawei Technologies.

“Alibaba Cloud has lost some ground with government and state-owned enterprise clients, which were previously a stronghold for the company,” Li said.

“During his leadership tenure, Alibaba Cloud’s business did not improve significantly despite his efforts. Zhang likely realised that the challenges facing Alibaba Cloud’s lacklustre growth were beyond what he could influence or control as an individual executive.”

Li believes Zhang’s departure will not significantly impact Alibaba Cloud’s listing plans, as it will depend on the unit’s business performance, and Alibaba will continue to execute the spin-off plan under a separate management team.

Union Bancaire Privee’s managing director, Vey-Sern Ling, viewed the move as positive as it would allow Alibaba and the cloud business to start from a “clean slate” and noted macro and geopolitical concerns over China.

In its letter, Alibaba claimed that Zhang would continue to support the company by “channelling his expertise differently” and that it would provide $1 billion to a technology fund that Zhang planned to establish. 

Zhang received an “emeritus” title from Alibaba, for the first time in the company’s history.

According to analysts, the cloud unit is worth between $41 billion and $60 billion, but because of the vast amounts of data it manages, it may come under scrutiny from domestic and foreign regulators.

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Business

Irfan Siddiqui meets with the PM and informs him about the Senate performance of the parliamentary party.

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The head of the Senate’s Foreign Affairs Standing Committee and the PML-N’s parliamentary leader paid Prime Minister Muhammad Shehbaz Sharif a visit in Islamabad.

Senator Irfan Siddiqui gave the Prime Minister an update on the Parliamentary Party’s Senate performance.

Additionally, Senator Irfan Siddiqui gave the Prime Minister an update on the Senate Standing Committee on Foreign Affairs’ performance.

He complimented the Prime Minister on his outstanding efforts to bring Pakistan’s economy back on track and meet its economic objectives.

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Business

SIFC Increases Direct Foreign Investment: Investment in the Energy Sector Rises by 120%

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The Special Investment Facilitation Council is intended to help Pakistan’s energy sector attract $585.6 million in direct foreign investment in 2024–2025. The amount invested at the same time previous year was $266.3 million.

This is a notable 120% rise, mostly due to investments in gas exploration, oil, and power. Such expansion indicates heightened investor confidence and emphasizes the development potential in important areas.

The State Bank reports that foreign investment in other vital industries has increased by 48% to $771 million.

This advancement is a blatant testament to SIFC’s efficient investment procedure and quick project execution.

The purpose of the Special Investment Facilitation Council is to establish Pakistan as an investment hub by aggressively promoting regional trade and investment in the energy sector and other critical industries.

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Business

Discos report losses of Rs239 billion.

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When compared to the same period last year, the data indicates that discos have decreased their losses in the first quarter of the current fiscal year.

The distribution businesses recorded losses of Rs239 billion in the first three months of the current fiscal year, a substantial decrease from the Rs308 billion losses sustained during the same period the previous year.

Additionally, the distribution businesses’ rate of recovery has improved. It has increased to 91% in the first quarter of this year from 84% in the same period last year, indicating success in revenue collection.

Regarding circular debt, the Power division observed a notable change. Last year, between July and October, the circular debt grew by Rs301 billion. Nonetheless, this year’s first four months saw a relatively modest increase in circular debt, totaling about Rs11 billion.

These enhancements show promising developments in the electricity sector’s financial health in Pakistan, where initiatives are being made to accelerate recovery rates and slow the expansion of circular debt.

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