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Chinese search engine operator Baidu surpbaded the market forecast for fourth quarter business and profit figures Thursday, while its core business of online marketing remained resilient and its service provider Streaming, similar to Netflix, has increased.
Baidu is banking on streaming and new areas such as artificial intelligence (AI) will increase revenue and offset the decline in advertising sales in real estate, finance and other sectors affected by the slowdown in China.
The company, which is trying to reduce its dependence on its core research business, has heavily invested in iQiyi content and in promotions to attract new customers last year, while his online advertising business was showing signs of pressure.
"We have entered a new stage for the Chinese internet," said Robin Li, chief executive of Baidu, during a conference call with badysts, warning that the market was saturated.
"The new growth will be driven by technological innovation.For our main research thread and our news feed, we continue to see that there is still much to be done."
Baidu will begin to expand its artificial intelligence capabilities, such as smart speakers and autonomous driving, to businesses and governments to increase profits, leaders said.
The company's key online marketing business, which includes more than three quarters of the company's revenue, research, news feed and video application, grew 10% to 21.2 billion yuan ($ 3.15 billion) in the quarter ended December 31.
The company's revenues, however, increased by 10% in December, the slowest pace in six quarters, while spending per client fell 4%.
In contrast, iQiyi's revenues jumped 55 percent to 7 billion yuan. However, content costs nearly doubled to 7.3 billion yuan, mainly for iQiyi, and the company expects these expenses to increase in 2019.
"We have made a huge promotion around the Chinese New Year so we have to consider this cost," said Herman Yu, chief financial officer, referring to a campaign run in cooperation with the state broadcaster CCTV.
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