Baidu shares slump after lower Q4 revenue projection

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Chinese search engine giant Baidu Inc offered a disappointing revenue outlook for the rest of the year, blaming lost advertising sales, which sent its shares sliding more than 10 percent.

It predicted a fourth-quarter revenue growth of 22 percent to 29 percent from a year earlier, below an average analyst forecast of 36 percent.

For the third-quarter, it logged 29 percent growth in revenue to 23.49 billion yuan or 3.5 billion U.S. dollars, in line with expectations.

Net income more than doubled to 7.9 billion yuan, helped by the sale of its food-delivery business.

The sale of its loss-making food delivery unit to a company backed by rival Alibaba Group Holding Ltd, will also mean loss of revenue, said Baidu’s Chief Financial Officer Herman Yu.

On the other hand, offloading the business also unburdened the company of massive expenses to burn market share, a move Yu said fell under "a year-long strategy to free up the company's resources and management to focus on AI."

Baidu, which is seeking to get back on a firmer footing after a series of setbacks, said companies had reined in marketing to show respect as Beijing held the sensitive gathering where it reaffirmed the position of President Xi Jinping.

Baidu’s content and advertising profits have already been hurt by Beijing’s recent drive to regulate rein in rumors and online content.

That comes on top of a major setback last year when the death of a student with cancer was tied to healthcare advertising he had found on Baidu’s platforms. The case spurred public anger and led to strict new regulations.

Baidu Chief Executive Robin Li, speaking on a call with analysts on Friday, added the company has created China’s "largest database to combat fake news," cooperating with 600 organizations to identify problem content.

Baidu’s US-listed shares plummeted more than 10 percent to 234 US dollars per share in extended trading, even though the company posted a 69 percent jump in operating income to 4.7 billion yuan in the quarter just ended.

In a further sign that its progress in recovery has been quite slow, Baidu said its ad business had 486,000 active online marketing customers in the third quarter, a three percent gain from the previous quarter but still down seven percent from a year earlier.

Source(s): Reuters