Update | Baidu’s Q4 sales dips as search engine struggles to regain traction
Baidu, China’s largest online search operator, reported a second straight quarter of sales decline, as it struggles to regain traction after last year’s public backlash from the death of a medical student linked to an advertising fiasco.
Sales dipped 2.6 per cent to 18.21 billion yuan (US$2.65 billion) in the fourth quarter, better than the 18.17 billion yuan consensus estimate of 16 analysts polled by Bloomberg.
Net profit in the quarter was 4.61 billion yuan, Baidu said. The previous year’s fourth-quarter net income was non-comparable because of a one-off gain when Baidu exchanged Qunar shares with Ctrip, bolstering the 2015 profit to 25.05 billion yuan.
Baidu, the dominant search engine for China’s 731 million internet users, has seen a turbulent year in 2016, after backlash from the May advertising fiasco forced the company to stop selling medical and healthcare-related ads. The company’s stock price plunged 13 per cent last year, wiping US$6.9 billion off its market value.
“We have largely completed our initiative to ensure that new and existing customers meet our stringent quality requirements,” Jennifer Li, chief financial officer of Baidu, said in a conference call following the release of the earning report.
“We believe the most significant revenue impact is largely behind us. Revenue in the fourth quarter resets our revenue base and we look forward to 2017 as a time of gradual recovery and growth. Advertising business is affected by the clean up effort in the short term, but Baidu’s value proposition to our customers remains strong,” she said.
Competition for online advertising is intensifying in China, from two of the country’s largest provider of Internet-related services. Alibaba Group Holdings, which operates the largest online shopping platforms on earth, is increasingly getting revenue from advertisements on its Tmall and taobao platforms. Tencent Holdings, operator of China’s largest mobile social network, is also selling advertising to more than 800 million users of its WeChat service.