BEIJING (Reuters) - Chinese search leader Baidu Inc’s first-quarter net income fell to its lowest level since 2012 and revenue grew at its slowest pace in more than seven years, as its long decline from previously heady growth continued.
The Chinese Internet stalwart said it now expected revenue growth to slip even further in the April-June quarter, to 21.3-24.2 percent, once again underscoring the importance of its ongoing efforts to diversify away from its core search business.
The company’s strategic reassessment in recent months has involved selling off its online travel unit and considering an offer for its video streaming site as it grapples with China’s economic slowdown.
So far the effort has not paid off, even as costs continue to rise at a rapid clip.
Net income fell 19 percent to 1.99 billion yuan ($307.41 million) in the January-March quarter from 2.45 billion yuan a year earlier, Baidu said. The company was expected to post a net income decline of 17.1 percent to 2.03 billion yuan, according to a Thomson Reuters survey of 8 analysts.
Baidu’s revenues rose 24.3 percent to 15.82 billion yuan ($2.44 billion) from 12.72 billion yuan a year earlier. That growth is its slowest in over seven years, and was just shy of analysts’ estimate of a 24.7 percent gain.
Swallowing up a chunk of Baidu’s resources are services like food delivery and group buying. These contributed to a 33.5 percent year-on-year jump in selling, general and administrative expenses to 3.946 billion yuan in the first three months of 2016.
Baidu has also touted its efforts to develop artificial intelligence, even as expenses for research and development in the first quarter fell 8.1 percent from the previous year.
The company’s shares fell 1 percent in early trade on Friday, having gained 5 percent in extended trading the day before.
Baidu’s online marketing revenue rose about 19.3 percent to 14.93 billion yuan.
Excluding items, the company earned 6.80 yuan per American depositary share.
Total operating costs rose 28.8 percent to 13.61 billion yuan.
Reporting by Paul Carsten in Beijing and Anya George Tharakan in Bengaluru; Editing by Stephen Coates