The quarterly profit of Baidu, China's Internet search leader, took a sharp drop after a Chinese regulatory crackdown on online search and advertising
Baidu is expecting an increase in revenue from the 15.82 billion yuan reported a year ago, to 16.48 billion yuan to 17.03 billion yuan for the current quarter. The American depositary receipts of Baidu increased 15 percent over the past 12 months, rising 2.7 percent to $189.11 in after-hours trading.
The company had a near monopoly on the Internet search traffic of the mainland since Google shifted business to Hong Kong after clashing with China's government over censorship.
Baidu reported a 665 million monthly active users of its mobile search for December, which is up 2 percent from the previous year. Baidu Wallet, on the other hand, reached 100 million activated accounts at the end of the year, up 88 percent.
Despite this, they are ordered to revamp their advertising practices due to an incident where a college student who had cancer died after taking a therapy that he found on a sponsored link of Baidu.
The tougher requirements forced the company to drop advertisers. It is reported that there is an 18.6 percent drop in the total advertisers of the company and an 8.2 percent decline in online marketing revenue in the most recent period.
Jennifer Li, Baidu's Chief Financial Officer, stated on the investor call that the worst was over, echoing previous statements that Baidu expected fourth-quarter results to bear the brunt of the changes and the company would then focus on rebuilding the business.
Robin Li, Baidu's Chairman, said on an investor call to discuss the results of the company's decision on scaling back food deliveries and other online-to-offline services in order to focus on artificial intelligence this year.
Baidu's overall forth-quarter revenue dropped 85 percent to 4.13 billion yuan. Besides the advertising scandal, part of the decline was due to a profit jump when Qunar, the company's online travel-booking service, carried out a share swap with rival Ctrip.