BEIJING: Chinese Internet search giant Baidu blew past earnings estimates on Thursday, sending its US-listed shares sharply higher in after-hours trading as investors cheered strong growth in its advertising business.
The firm, which has had to bounce back from a bruising medical advertising scandal in 2016, said it was now taking extra measures to clean up content on its platforms.
Baidu’s stock climbed 5.5 percent to $252 in late trading after marketing revenue grew 31 percent to 20.9 billion yuan ($3.30 billion), its fastest quarterly rate in over two years. Net profit rose 23.4 percent versus forecasts of 19.5 percent.
Baidu said it now expects second-quarter revenues of between 24.91 billion yuan and 26.19 billion yuan, indicating a 19.3-25.4 percent rise versus estimates of a 15.9 percent climb according to Thomson Reuters.
The search firm’s news feed received an unexpected bump in the first quarter due to a crackdown by Chinese Internet regulators on low-brow content, which saw several competing apps targeted during a key client-acquisition period.
Jinri Toutiao, one of China’s most popular news feed apps and a key Baidu rival, is among the apps to have been punished by censors this year. The news feed platform was temporarily removed from local app stores earlier this month.
“This is a one-off, but the timing is quite interesting. Baidu in its marketing can now assure clients that at least on the feed side it has safer content,” said Pacific Epoch analyst Raymond Feng, adding it made the firm “a more reliable choice.”
Analysts said the early year bump boded well for the rest of 2018, as advertisers tended to sign year-long contracts.
During a conference call with analysts on Friday, Chief Executive Robin Li said the company has employed artificial intelligence technology to target click-bait and inappropriate content. Baidu removed 20.2 billion malicious web pages in 2017.
The helping hand from censors is in stark contrast to Baidu’s woes two years ago, when regulators cracked down on its advertising practices, gutting its marketing client base and bringing its revenue growth to a grinding halt.
The company has since sold or withdrawn from a number of businesses to focus on autonomous driving, AI and its news feed product, regaining momentum and investor confidence.
Baidu’s total revenue rose about 24 percent to 20.91 billion yuan in the three months to March 31, its slowest rate in three quarters despite topping analyst estimates.
The positive results also reflect lower-than-expected research and development expenses, which have sky-rocketed since Baidu’s pivot to AI due to steep costs hiring top talent.
Content costs linked to Baidu’s newly listed entertainment subsidiary iQiyi Inc. are also expected to squeeze its margins for the foreseeable future, amid stiff competition in online content from rival Tencent Holdings Ltd.
Excluding one-time items, Baidu reported earnings of 16.30 yuan per American depositary share, above expectations of 10.57 yuan.
Baidu’s net income was also boosted by a new accounting standard that requires companies to report the value of their investments in private companies.
China’s Baidu beats forecasts as it sidesteps censors, boosts ad sales
China’s Baidu beats forecasts as it sidesteps censors, boosts ad sales
- Baidu said it now expects second-quarter revenues of between 24.91 billion yuan and 26.19 billion yuan
- Baidu’s total revenue rose about 24 percent to 20.91 billion yuan in the three months to March 31
US allows countries to buy Russian oil stranded at sea for 30 days
- US issues 30-day license for stranded Russian oil purchases
- Measure the latest by Trump administration to calm energy markets jolted by Iran war
The United States issued a 30-day license for countries to buy Russian oil and petroleum products currently stranded at sea in what Treasury Secretary Scott Bessent said was a step to stabilize global energy markets roiled by the Iran war.
The announcement comes a day after the US Energy Department said that the US would be releasing 172 million barrels of oil from the strategic petroleum reserve in an effort to curb sky-rocketing oil prices in the wake of the war in Iran. That release was part of a broader commitment by the 32-nation International Energy Agency to release 400 million barrels of oil. The agency said earlier on Thursday that he war in the Middle East was creating the biggest oil supply disruption in history. Bessent, in a statement on X released hours after benchmark oil prices shot above $100 a barrel, said the measure was “narrowly tailored” and “short-term” and would not provide significant financial benefit to the Russian government.
“The temporary increase in oil prices is a short-term and temporary disruption that will result in a massive benefit to our nation and economy in the long-term,” Bessent said in the statement, echoing President Donald Trump.
Thursday’s license, which authorizes the delivery and sale of Russian crude oil and petroleum products loaded on vessels as of March 12, will remain valid through midnight Washington time on April 11, according to the text of the license posted on the Treasury Department’s website. The US Treasury previously issued a 30-day waiver on March 5 specifically for India, allowing New Delhi to buy Russian oil stuck at sea. Among other measures to tame energy prices, Trump has already ordered the US International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf and said the US Navy could escort ships in the region. In another attempt to control prices, the Trump administration is considering temporarily waiving a shipping rule known as the Jones Act to ensure energy and agricultural products can move freely between US ports, the White House said. Waiving the rule would allow foreign ships to carry fuel between US ports, potentially lowering costs and speeding deliveries.
“The president is taking every action he can to lower prices ... unsanctioned oil that’s at sea to get that into the market, continuing to push our own producers to drill and expand production as fast and as far as they can, providing regulatory relief, and you’re going to see more and more in the days to come,” White House Deputy Chief of Staff Stephen Miller told Fox News’ “Primetime” program on Thursday.
There were about 124 million barrels of Russian-origin oil on water across 30 different locations globally as of Thursday, Fox News reported, adding that the US license would provide around five to six days of supply when taking into account the daily loss of oil from the Strait. Trump said earlier on Thursday the United States stood to make significant money from oil prices driven higher by the war, prompting criticism from some lawmakers who accused him of caring only about rich people.
US and Israeli strikes on Iran and the subsequent response by Tehran have widened regional tensions and paralyzed shipping through the Strait of Hormuz, disrupting vital Middle East oil and gas flows and sending energy prices higher.
Raising the stakes for the global economy, Iran’s Islamic Revolutionary Guard Corps says it will block oil shipments from the Gulf unless the US and Israeli attacks cease.
