Alibaba Pictures, the films production part of the Chinese e-commerce giant, Alibaba has announced that it is delaying its first half results and suspending its trading on the Hong-Kong stock exchange amid the discovery of some suspicious accounting problems and errors. Alibaba Pictures Group, formerly the ChinaVision Media Group, said that it has discovered “possible noncompliant accounting treatments,” in its records. Alibaba paid $800 million for acquiring this part in order to make a leap into the world of films and entertainment. Yahoo! Inc. (NASDAQ:YHOO) has a $26 billion stake in Alibaba and the company might get worried about the news. Alibaba is expected to roll out what may be the biggest IPO in American history very soon. Yahoo! Inc. (NASDAQ:YHOO) has a lot of expectations from Alibaba in the US markets. Discussing this issue in a program, CNBC’s Eunice Yoon said that the Chinese giant is under a lot of pressure because of this accounting irregularity.
“I think, first, we have to know the backdrop of this entire story and that is that Alibaba is looking to get into the entertainment industry, so it’s been on an acquisition trail and as part of that, this was one of its latest acquisition, it took a 60% stake in a company that was formerly known as China Vision Media, and they bought that for $800 million, and that gave it rights to TV dramas as well as English Premier Football League matches. Now, as part of the deal, the company, Alibaba, was allowed to put in their own management, so their new managers were looking at the books and they found that there were accounting irregularities that were on those books before the managers came in […],” said Yoon.
Yoon said that it’s very difficult to say anything about the effect of this accounting error or fraud on Alibaba. She said that Alibaba is under constant pressure from the corporate world before its launch in the US markets. If Aibaba’s reputation gets hurt around the world, Yahoo! Inc. (NASDAQ:YHOO) will be facing its direct repercussions being among the largest stakeholders of the company.
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