Credit: Giphy
Also in this letter:
■ Tata Neu CTO Sauvik Banerjjee quits four months after launch
■ Meta flags recession fears after posting first-ever yearly revenue drop
■ Prof who predicted Zomato’s Rs 41 share price has a fresh take
Jack Ma to give up control of Ant Group: WSJ report
Chinese billionaire Jack Ma plans to give up control of Ant Group Co, the Wall Street Journal reported on Thursday.
The development comes amid Ant Group’s efforts to distance itself from Alibaba Group after facing intense scrutiny from Chinese regulators.
Details: Ma doesn’t hold an executive role at Ant or a seat on its board but controls 50.52% of its shares through a private entity, where he is a majority shareholder.
According to the Journal, Ma could relinquish control by transferring some of his voting power to other Ant officials, including chief executive Eric Jing, giving them collective control of the company.
Arm’s length: The need to end Ma’s control at Ant became increasingly important after the souring regulatory environment forced Ant and Alibaba to cut ties. On Tuesday, seven Ant Group executives, including Jing stepped down from Alibaba Partnership, Alibaba’s annual report revealed.
Ant said Ma’s move was “part of its continuous efforts to enhance corporate governance”.
The two companies have also terminated their long-running commercial and data-sharing agreements that once gave Alibaba an edge over competitors.
Second attempt: This is not the first time Ma has contemplated relinquishing control over Ant. Previously, he did not execute that plan as he didn’t want to delay the company’s plans for an initial public offering (IPO).
However, the Chinese authorities halted Ant’s $34 billion-plus IPO in 2020 at the last minute, forcing the technology firm to reorganise as a financial holding company regulated by China’s central bank.
As the overhaul progresses, Ant is taking the opportunity to reduce its reliance on Ma.
Tata Neu CTO Sauvik Banerjjee quits four months after launch
Sauvik Banerjjee, founding member and chief technology officer (CTO) of Tata Neu, has resigned from the ecommerce venture of the Tata group, people aware of the matter said.
A Neu problem: His exit comes just four months after the Mumbai-based conglomerate launched the much-hyped ‘super app’ in April, after several delays.
Neu was launched with a marketing blitz around the Indian Premier League, for which it was the title sponsor. This is the first major exit of a senior executive since its launch.
Tata Neu’s CTO post has fallen vacant at a time when it is looking to fix various tech glitches and enhance the shopping experience on the app. We reported in June that the ecommerce vertical had missed its monthly sales target of $200 million by about $50 million in the first month after its launch.
Who’ll replace him? People aware of the matter said the Tatas may replace Banerjjee with a TCS veteran but are also looking at external candidates. “They (Tata Neu) have been looking for a CTO externally as well, and some executives at top startups have been approached,” said one of the people briefed on the matter.
Banerjjee joined Tata group in 2016 as CTO of Tata Cliq. He moved to Tata Digital in 2019 and has been part of the core team ever since. Insiders said Banerjjee is keen to relocate abroad, where he spent much of his stint at TCS.
We reported previously that Mukesh Bansal, president at Tata Digital, has been hiring senior executives from ecommerce firms including Flipkart, Udaan, Blinkit and others. Hari Menon, cofounder and CEO of BigBasket, is another senior executive at the group who has a critical role in scaling Tata Neu.
Meta flags recession fears after posting first-ever yearly revenue drop
Meta will reduce its pace of hiring in the face of macroeconomic headwinds that are taking a toll on its performance and growth prospects, CEO Mark Zuckerberg said after the company reported its first-ever yearly decline in revenue for the second quarter.
Catch up quick: Meta’s revenue fell 1% to $28.8 billion in Q2 and the company said this could fall further in Q3. It expects third-quarter revenue in the range of $26-28.5 billion. Overall, Meta’s profit fell 36% to $6.7 billion in the quarter.
Zuckerberg’s comments mirror those of Alphabet CEO Sundar Pichai, who told employees in a memo, “We’re not immune to economic headwinds.”
Hiring slowdown: Meta said its headcount increased 32% from a year earlier to 83,553 but Zuckerberg said the firm would reduce its pace of hiring over the coming year.
“This is a period that demands more intensity, and I expect us to get more done with fewer resources,” he said.
Also Read: Twitter accepts October 17 trial but is concerned Musk will try to delay
What ails Meta? Meta has been hit hard by Apple’s iOS privacy update last year, which limits its ability to track users, in addition to the economic uncertainty that has forced companies to slash their ad budgets.
Stiff competition from TikTok has only worsened the blow.
Rejig: Meta CFO David Wehner will take on a new role as the firm’s first chief strategy officer from November 1, according to the company’s earnings report. Susan Li, Meta’s current vice president of finance, will be its new chief financial officer.
Also Read: Cognizant lowers annual revenue guidance, net profit up 12.7%
Professor who predicted Zomato’s Rs 41 share price has a fresh take
When New York University finance professor Aswath Damodaran predicted last year Zomato’s stock price would fall to Rs 41, not too many people believed that would happen.
After all, the company had a blockbuster IPO and listed at a large premium over the Rs 76 issue price last July. But Zomato’s stock has been pummelled in the past few months amid a global tech rout.
The company’s shares ended the day at Rs 43.95 on Wednesday, vindicating Damodaran’s assessment.
A new take: Damodaran revalued Zomato’s shares on July 27 and said their fair value had dropped from Rs 40.79 to Rs 35.32 each, “with much of the value change from last year coming from macroeconomic developments, manifested in a higher cost of capital”.
He suggested that if the share price in fact fell to Rs 35, he would buy Zomato, albeit only as part of a diversified portfolio and not a standalone investment.
Yes, but: He pointed out that over the previous year, the take rate, or the portion of gross order value that Zomato keeps, had decreased significantly. He added, “This reflects increased market competition, higher delivery costs, and Zomato’s entry into newer markets (like grocery delivery) with lower revenue sharing.”
To push ahead with its expansion, Zomato has been buying up smaller companies such as Blinkit. But Damodaran said, “It is an open question whether Zomato can continue to deliver growth effectively and efficiently through this acquisition-driven strategy, using its own shares as currency, especially as it scales up.
Tweet of the day
Rural India is driving internet adoption, survey finds
Rural Indians are usurping their urban counterparts in driving Internet adoption across the country, according to a new report titled ‘Internet in India’ by the Internet and Mobile Association of India (IAMAI), an industry body, and Kantar, a marketing data and analytics company.
Tell me more: According to the report, based on a survey of over 77,000 households across all states and Union Territories except Lakshadweep, India currently has about 692 million active internet users. Of these, 351 million are in rural India, where internet penetration stands at 37%, while 341 million are in urban India — with an internet penetration of 69%.
The report also said around 346 million Indians now make online transactions, more than the total US population of 331 million.
It also said that by 2025, India would have 900 million internet users, with rural Indians leading the pack. Currently, about 762 million Indians don’t use the internet — of which 63% are rural Indians.
Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Ruchir Vyas in New Delhi. Graphics and illustrations by Rahul Awasthi.
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