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China battle drives Uber to $1.3bn loss

  • Author:naky
  • Source:www.diecastingpartsupplier.com
  • Release on :2016-09-06
Uber’s costly battle for the Chinese ride-sharing market helped drive losses of $1.3bn during the first half of 2016, making the San Francisco-based company one of the most deeply lossmaking in Silicon Valley.

The company, which offers transportation through its smartphone app in more than 60 countries, had been spending heavily in markets such as China and India, where it was locked in competition with local rivals.However, the losses may decline later this year after Uber sold its China unit to local rival Didi Chuxing earlier this month, in effect ending its costly subsidy war there.

Uber is one of Silicon Valley’s best-funded companies, raising more than $15bn in equity and debt from investors, and recently achieving a $68bn valuation.The losses, which were first reported by Bloomberg, came to $520m during the first quarter and more than $750m during the second quarter, on a measure before interest, tax, depreciation and amortisation.

Travis Kalanick, chief executive, has previously told the Financial Times that Uber was profitable during the first quarter in the US, Australia and the region of Europe, the Middle East and Africa. The company spent heavily in China and India during that time, as well as expanding to new markets.However, the US turned unprofitable during the second quarter of this year, with losses of $100m according to Bloomberg, as Uber boosted subsidies to compete with its rival Lyft.

However, the US turned unprofitable during the second quarter of this year, with losses of $100m according to Bloomberg, as Uber boosted subsidies to compete with its rival Lyft.With the battle for China now out of the way, Uber has been increasing its focus on new projects that will require heavy investment, including mapping, driverless cars and car fleets that can be leased to drivers.

Underscoring this shift in focus, Uber also made its largest ever acquisition in July, when it bought Otto, a driverless truck start-up founded by several key members of Alphabet’s driverless programme.Otto’s backers received a stake in Uber worth about $680m as well as a guarantee of 20 per cent of future profits from any trucking business.

As part of that acquisition Uber will open driverless research centres in Palo Alto and in San Francisco, in addition to its research centre in Pittsburgh.The company is also preparing to spend half a billion dollars on its mapping efforts as it seeks to build more accurate maps and reduce its dependence on Google Maps. It already has mapping cars on the road in the US and Mexico.

Uber’s investors include Goldman Sachs, Benchmark, and Saudi Arabia’s sovereign wealth fund.