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Baidu shares plunge over poor revenue outlook
[BEIJING] Shares in Chinese internet giant Baidu plunged as much as 15 per cent in after hours trading Friday when it said revenues would take a hit in the final quarter because of self-imposed content restrictions during the Communist Party congress.
The projected decline in revenue at Baidu's movie and television streaming unit iQiyi, came from limiting screening of popular TV shows during the runup to the congress that ended this week by giving President Xi Jinping a second term at the helm of the party.
Television stations in China have featured wall-to-wall coverage of the 19th Party Congress.
Baidu's chief financial officer Herman Yu said that, "to show our respect, iQiyi adopted a self-restriction to not show hot series during this time."
The search giant's forecast fourth-quarter revenue of up to 23.4 billion yuan (S$4.806 billion) fell short of the 24.8 billion projected by analysts cited by Bloomberg News.
Its third-quarter report beat analyst expectations on income and matched them on revenue, according to Bloomberg News.
Net income for the period reached 7.9 billion yuan, on sales of 23.5 billion yuan marking a 29 per cent increase from the same period last year. Mobile revenue accounted for 73 per cent of total revenue, up from 64 per cent in the same period last year.
Baidu's search engine dominates the Chinese market, but in recent years the company has struggled to diversify into other profitable business lines and suffers from increasing competition from Tencent and Alibaba.
It sold off its loss-making food delivery arm this summer while its core online advertising business has taken a hit after a scandal broke out last year over the promotion of search results featuring false medical claims.
The controversy prompted regulators to impose new restrictions on promoted search results, forcing Baidu to better police its advertisers.
That in turn trimmed Baidu's advertiser ranks, and its count of online marketers was down seven percent in the third quarter from the same period last year.
The company is in the midst of a turnaround, refocusing its business on artificial intelligence and autonomous vehicles.
But much of the company's new investment will not have material impact on results in the near future, company officials told investors on Friday.