Shares of Chinese e-commerce giant (NYSE: BABA) dipped in morning trading on the NYSE Tuesday and remain down 2.4% as of 12:45 p.m. ET on news that the company's cloud computing business is laying off workers.

Bloomberg broke the story today, reporting that Alibaba will lay off 7% of the employees at its cloud computing division before spinning this division off and IPO'ing it.  

Investors seem unhappy today, but this move actually makes sense. Alibaba Cloud is the company's second-biggest division by revenues (after e-commerce, of course), but after strong growth for years, its sales declined 5% last year -- and Cloud still isn't profitable for Alibaba.

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Source Fool.com