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Mobile marketing costs erode profit in Q4
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CHINA’S largest search engine operator Baidu posted lower-than-expected profit in the fourth quarter after it spent more to attract users to its mobile services.
Its quarterly profit rose 16 percent to 3.23 billion yuan (US$518 million), below the 3.52 billion yuan average of nine analysts’ estimates compiled by Bloomberg News.
Revenue jumped 47.5 percent from a year ago to 14.1 billion yuan in the fourth quarter.
Mobile services contributed 42 percent of revenue in the three months ended on December 31, compared with third quarter’s 36 percent, the company said in stock exchange filing yesterday.
Monthly mobile income overtook desktop search income for the first time in December.
Baidu incurred higher traffic acquisition costs of 13.4 percent of quarterly revenue, up from 12.9 percent in the third quarter, due to more mobile-related marketing activities for its mobile applications and the Hao123 portal that leads users to other popular Chinese websites.
The company expects revenue in the first quarter of this year to be between 12.65 billion yuan and 13.07 billion yuan
It expects sales to rebound in the second quarter, and revenue from mobile applications will improve in the coming year, Chief Financial Officer Jennifer Li told a conference call.
“This year will be an important year for Baidu as we execute our plan and invest for the next phase of mobile growth,” she said.
Baidu had 85.9 percent share of China’s search engine market in the fourth quarter.
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