Profits of Chinese internet giant Baidu took a plunge towards the end of 2018, as the company stated that growth was offset by heavy spending on new products and services, reported Caixin.
iQiyi, the company’s online video unit, revealed continued losses which sapped at Baidu’s bottom line despite how it saw strong growth in revenue. Baidu’s shares were up 3.7% in after-hours trading shortly after the results came out, while separately listed iQiyi shares were down nearly 1%.
“The diversification of Baidu’s business from mobile internet into the smart home, smart transportation, cloud and autonomous driving markets will require heavy investments,” said Baidu CFO Herman Yu. “Nevertheless, these investments taken together give Baidu a balanced portfolio for short-term, medium-term and long-term returns, and we hope to see these investments bear fruit and accelerate Baidu’s revenue growth in coming years.”
The company’s revenue rose 22% in the fourth quarter last year to RMB 27.2 billion ($4 billion), but total net revenue from its search engine, grew at a much slower 14%. Operating income tumbled 77%, while net profit fell 50% to RMB 2.1 billion.