Baidu hitches its 2017 rebound hopes to AI

The Baidu Inc logo is displayed outside company's headquarters in Beijing, Nov 12, 2014. [Photo/VCG]

Baidu Inc, the Chinese internet search leader, said it is expecting a sales rebound in the first quarter of 2017 on the back of new revenue drivers like artificial intelligence, after a web advertising scandal last year crushed quarterly earnings twice in a row.

The company announced its fiscal 2016 results on Friday. Its operating profit dropped almost 14 percent year-on-year to 10.04 billion yuan ($1.46 billion) on a revenue of 70.5 billion yuan, up 6.3 percent.

Fourth-quarter revenue dropped 2.6 percent year-on-year to 18.21 billion yuan.

Baidu also elevated its new president Lu Qi, an AI expert, to the additional role of vice-chairman, giving him a bigger say in the company.

"During the fourth quarter, we largely completed our initiative to ensure that new and existing customers meet our quality requirements," the company said in a statement. "We believe that the impact of these initiatives is mostly behind us and we look forward to 2017 as a time of recovery and growth."

The results were in line with the earlier estimate of Robin Li, Baidu's chairman, that the fourth-quarter performance was most vulnerable to growth reversal due to Beijing's stringent measures to rein in unregulated online marketing.

Such measures were effected after the death of a young man who sought unconventional cancer treatment that was advertised on Baidu.

The online search player responded by cutting advertisements alongside search results, vetting advertisers more closely, as well as by slashing subsidies given to customers using its group-buying platform Nuomi.

The company has also lowered marketing expenses on Nuomi and Baidu's Takeout Delivery, Li said in a conference call on Friday. But it still regards online-to-offline or O2O operations as an indispensable part of its business.

The company forecast revenue of 16.48 billion yuan to 17.03 billion yuan for this quarter.