© Reuters. Alibaba’s (BABA) cloud business to cut 7% staff as it prepares for a spinoff – report

Alibaba’s (NYSE:) cloud division has started to cut jobs and could eventually reduce the total workforce by roughly 7%, Bloomberg News reports.

The restructuring process has begun as the unit prepares for a spinoff within the next 12 months. The aim of the process is to streamline the once fast-growing business. An initial public offering (IPO) is also not ruled out.

Bloomberg also added that initial forecasts have Ali Baba Cloud’s valuation at over $30 billion. The cloud unit is one of the biggest candidates for an IPO given its mature business model.

CEO Daniel Zhang told analysts last week that he believes the cloud unit could even exceed Alibaba in size one day. The business segment generated almost $12B in sales in 2022.

The “cloud business is relatively independent and different from other consumer facing business,” Jefferies analysts said last week.

Susquehanna analysts said today that the restructuring process is a long-term value driver for shareholders.

“Each company can surface additional operating metrics and can better focus on individual business and financing needs,” the analysts said.

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