(Bloomberg) — Alibaba Group Holding Ltd. unveiled a $25 billion addition to its stock repurchase program as it reported disappointing revenue, reflecting how rivals such as PDD Holdings Inc. are eroding its dominance in China.

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The Hangzhou-based group, which intends to carve out its major business lines into independent units, posted a 5% rise in December quarter sales to 260.3 billion yuan ($36.2 billion), versus the average analysts’ estimate of about 261 billion yuan. Net income in the period fell sharply to 14.4 billion yuan.

Alibaba gained more than 5% in pre-market trading in New York after the company said its board had approved the new share buybacks. That helped salve concerns about the performance of the online shopping pioneer — a barometer of Chinese consumer demand, — struggling to fend off new rivals from PDD to ByteDance Ltd. The disappointing sales cast more uncertainty on a restructuring that will split the conglomerate into several parts including cloud and logistics, an overhaul designed to revive growth at a national icon.

Alibaba is trying to stage a comeback from years of brutal government punishment and strategic missteps that cost the e-commerce operator its place as leader of the country’s tech industry. Co-founder Jack Ma in November urged the company to correct its course.

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Chief Executive Officer Eddie Wu and Chairman Joseph Tsai, two of Ma’s longest-standing confidantes, took the helm as former chief Daniel Zhang abruptly quit, and are now charged with effecting the complicated multi-way split. The ultimate goal is to beat back upstarts like ByteDance’s Douyin and PDD, while charting a new course for Alibaba to become a major player in artificial intelligence and cloud computing.

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That entails streamlining and big moves. Wu is promoting a younger cohort of executives to revive its core Taobao and Tmall platforms, while exploring ways to unload non-core assets and dial back Zhang’s years-long “new retail” ambition. At the same time, Alibaba must find an answer to Douyin, which has won shoppers over and grew sales faster during last year’s Singles’ Day shopping festival.

Competition “is likely to continue to center on building market share at low prices,” Kenneth Fong, head of China internet research at UBS, said before the results. “Even if macroeconomic recovery occurs, price wars between platforms are likely to continue.”

What Bloomberg Intelligence Says

The gains from TTG and Cainiao likely helped reduce the drag on Alibaba’s overall profitability from steeper year-over-year international digital commerce loss in 3Q as the firm spent more to acquire more overseas shoppers, particularly on AliExpress.

– Catherine Lim and Trini Tan, analysts

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Alibaba is also keen to shore up its foothold in overseas markets. Units such as Lazada and Aliexpress underpin the global e-commerce operation, now among its fastest-growing divisions despite up-and-comers such as PDD’s Temu and Shein.

As with most major tech firms, Alibaba counts AI among its longer-term priorities. It’s developing its own ChatGPT-like services, while making multiple investments in startups such as Zhipu AI and Baichuan.

That AI effort has stuttered initially. Last year, Alibaba nixed the spinoff and IPO of its $11 billion cloud arm, surprising investors while citing US curbs that cut off access to Nvidia Corp.’s essential AI accelerator chips. It’s unclear what steps executives plan to take to rejuvenate a business that once counted among its growth engines, but has lost market share to state-owned players in recent years.

–With assistance from Vlad Savov, Sarah Zheng, Debby Wu and Peter Elstrom.

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