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Business

Alibaba replaces CEO despite revenue surge

Chinese e-commerce giant Alibaba has announced a surprise management reshuffle, replacing its Chief Executive Jonathan Lu. The shake-up came as the company reported a huge increase in revenues for the first quarter.

Alibaba said in a statement Thursday that the company's Chief Executive Officer (CEO) Jonathan Lu would be replaced by Daniel Zhang, currently Chief Operating Officer, from Sunday.

Lu, who had taken up the CEO post in May 2013, would remain on the management board as vice chairman, the Chinese e-commerce firm said.

"There is no better person to lead Alibaba Group as we embark on the next stage of our growth on top of the strong foundation that Jonathan helped build," Alibaba founder and Executive Chairman Jack Ma said of Zhang.

Zhang joined the company in August 2007 and is credited with turning Taobao Mall - a business-to-consumer platform - into one of the group's most important businesses. He was also a key architect of Alibaba's Singles' Day online shopping sale, which has become the world's biggest electronic retail event.

Change of generation

Zhang told Bloomberg television Thursday that the company was looking to bring in a younger generation of leaders.

"We will adopt a zero net asset policy this year for our headcount policy. But we will definitely continue to hire talented people to join us and replace those guys, under-performing employees," he said.

Zhang also noted that the leaders of the company's key business units were born in the 1970s, adding that he would strive to bring more employees born in the 1980s and 1990s to "the middle-class level, finally to the leadership level."

"We believe this will be the foundation for our future growth," he said.

Rapid growth

The Hangzhou-based company completed the world's biggest initial public offering (IPO) in September 2014 with a listing on the New York Stock Exchange that earned it $25 billion (22.1 billion euros). The IPO was priced at $68 and the shares rocketed to $120 in November. But since then they have been falling back, suffering from a poor third-quarter result and a row with Chinese authorities accusing Alibaba of allowing imitation goods to be sold on its platform.

On Thursday, however, the company said its revenue for the first quarter 2015 rose 45 percent to $2.81 billion, with mobile revenue showing a three-fold surge to $846 million. Net profit, though, plunged 49 percent to $463 million, hit by a share-based compensation expense.

Transactions made on mobile devices continued to grow, and accounted for just over half of the value of sales made on the company's China retail platforms, up from 42 percent in the previous quarter.

For the full year ending March, net income rose 4.0 percent to $3.92 billion. The number of active buyers on its Chinese platform reached 350 million for the year ending March, up 16 million from December.

The new quarterly report and management change gave the shares a boost: Alibaba soared 7.1 percent to $85.65 on the New York Stock Exchange in early trade after the release.

uhe/pad (Reuters, AFP)

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