China's Alibaba says may pay dividend if no M&A

HONG KONG, May 7 (Reuters) - China's top e-commerce company Alibaba (1688.HK) said on Thursday it might consider distributing a dividend to shareholders from its ample cash stockpile if it cannot conclude an acquisition deal with any suitable candidate.

"The board of directors has already put the dividend issue on the agenda and will consider this seriously ... it won't need to wait too long," Founder and Chairman Jack Ma told reporters. He did not give a timeframe.

Hong Kong-listed Alibaba shares, which surged 27.6 percent in the first quarter of 2009, jumped as much as 15.4 percent to HK$11.82 after Ma's comment on Thursday, the highest since June 23, 2008. The stock closed at HK$11.70, up 14.65 percent.

"The company has ample cash and if it doesn't find a suitable acquisition candidate -- I don't think there's a feasible acquisition target at the moment -- then Alibaba can distribute the cash," said Kevin Tam, analyst at Everbright Securities.

"Alibaba's business is directly related to the global economic trends and with signs that the global economy is improving and the Chinese economy is improving, plus with such an impressive membership growth, market sentiment should really turn positive."

Alibaba has cash on hand of 6.9 billion yuan (US$1 billion), including the US$400 million proceeds raised from its IPO in late 2007, according to CEO David Wei.

Wei said the parent's US$1.3 billion cash, raised from the sale of Alibaba's stake via the IPO, has mostly been untouched.

It is also studying opportunities to acquire e-commerce platforms, applications and related technology, Wei added.

YAHOO STAKE SALE

On market talk that key investor Yahoo (YHOO.O) may sell a stake in Alibaba, Ma said he had not received any notice about the share sale but would respect the decision of its investors.

Yahoo holds about 40 percent of Alibaba Group and has an investment of more than 1 percent in the listed firm.

Ma also said the parent company had no plans to seek a separate listing for its e-commerce retail website Taobao, the largest in China, or merge its operations with the listed firm.

Transactions conducted through Taobao totalled 99.9 billion yuan in 2008, up 131 percent from year-on-year. [ID:nCN0485517].

Hong Kong-listed Alibaba posted a sharp drop in first-quarter net profit, although it beat the average forecast, as higher expenses on development and obtaining users ate into margins.

Net income declined nearly 16 percent as a result of investments in customers, people and technology, it said.

Alibaba, which connects millions of registered small-business buyers and sellers of Chinese products online, said registered users topped 40 million, as more buyers moved their sourcing online for higher efficiency and greater product selection. (US$1=HK$7.8=6.819 yuan) (Reporting by Joanne Chiu, Donny Kwok and Nerilyn Tenorio, Editing by Jacqueline Wong)