Baidu says ‘revenue impact’ from 2016 medical advertising scandal is ‘largely behind’ it
Online search operator’s sales dipped 2.6 per cent to 18.21 billion yuan (US$2.65 billion) in the fourth quarter
Baidu, China’s largest online search operator, reported a second straight quarter of sales declines as it struggles to regain traction after last year’s public backlash from the death of a medical student linked to an advertising fiasco.
Sales dipped 2.6 per cent to 18.21 billion yuan (US$2.65 billion) in the fourth quarter, better than the 18.17 billion yuan consensus estimate of 16 analysts polled by Bloomberg.
Net profit in the quarter was 4.61 billion yuan, Baidu said. The previous year’s fourth-quarter net income was non-comparable because of a one-off gain when Baidu exchanged Qunar shares with Ctrip, bolstering the figure to 25.05 billion yuan.
Baidu, the dominant search engine for China’s 731 million internet users, had a turbulent 2016 after the backlash from the May advertising fiasco forced the company to stop selling medical and health care-related ads. The company’s stock price plunged 13 per cent last year, wiping US$6.9 billion off its market value.
“We have largely completed our initiative to ensure that new and existing customers meet our stringent quality requirements,” Jennifer Li, chief financial officer of Baidu, said in a conference call following the release of the earnings report.
We believe that the most significant revenue impact is largely behind us
“We believe that the most significant revenue impact is largely behind us. Revenue in the fourth quarter resets our revenue base and we look forward to 2017 as a time of gradual recovery and growth. The advertising business is affected by clean up efforts in the short term, but Baidu’s value proposition to our customers remains strong,” she said.
