NewBaidu, China’s Google, looks at fresh investments after solid results

Chinese online search giant Baidu, which posted better-than-expected earnings in the third quarter, plans to ramp up investments in online-to-offline (O2O) transaction services, while bolstering its stock price through a new US$2 billion share repurchase programme.

“Our core search business remains very robust and continues to provide a solid, profitable base of operation that enables us to move decisively and aggressively to capture the enormous opportunity in local and transaction services,” Baidu chairman and chief executive Robin Li Yanhong said in a conference call with analysts.

Nasdaq-listed Baidu reported a 36 per cent increase in total revenue to 18.38 billion yuan (HK$22.37 billion), which matched the company’s estimates. That turnover was up from 13.52 billion yuan in the same period last year, primarily due to higher mobile search advertising spending and O2O transaction income.

Mobile revenue accounted for 54 per cent of its total turnover last quarter, compared to 37 per cent a year ago.

The so-called gross merchandise value for Baidu’s O2O transaction services, which include Nuomi group-buying and Waimai food-delivery platforms, jumped 119 per cent year on year to 60.2 billion yuan.

“The momentum in transaction services gives us the confidence to continue investing,” said Jennifer Li, Baidu’s chief financial officer.

Third-quarter net profit, however, decreased 27 per cent to 2.84 billion yuan, down from 3.88 billion yuan a year earlier, due to greater selling, general and administrative expenses, research and development spending, and content costs for online video service Iqiyi.