China’s largest search engine company Baidu (BIDU.NASDAQ) announced on Thursday it would buy buy back US$1 billion in shares over the next year after its stock price fell 14% following lower-than-expected second-quarter profit, Reuters reported, citing a statement from the firm. The company’s plan to spend aggressively on connecting online smartphone users to offline services raised investor concerns on margins, triggering the shares’ worst two-day drop since late 2008. “The buyback demonstrates Baidu’s confidence in the O2O (online-to-offline) opportunity, and in our ability to capture it,” a Baidu spokesman said. But these O2O services are eroding the healthy margins Baidu enjoys from its core search business.
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