Baidu Inc (ADR) (NASDAQ:BIDU) reported lower-than-expected revenue in the quarter as the Chinese internet firm suffered from stricter regulatory environment for advertising business. The Chinese search engine said revenue dropped 0.7 percent to 18.25 billion Chinese yuan ($2.74 billion) in the quarter ended in September. Analysts polled by Thomson Reuters had projected revenue of 18.32 billion yuan. Baibu said it would see more loss in the coming quarters as the company continued to implement stricter controls on medial-related search advertising. Online marketing revenue dropped 6.7 percent to 16.49 billion yuan in the third quarter.
“This will have a short-term impact on our business and we expect it to be most pronounced during the fourth quarter, followed by a recovery early next year,” Chief executive Robin Li said on a conference call.
For the current quarter, Baidu sees revenue of 17.84 billion yuan to 18.38 billion yuan ($2.68 billion to $2.76 billion), missing analysts while analysts had projected revenue of 19.49 billion yuan. “Next year we will focus on building the business again,” Ms. Li said. “Q4 is what we anticipate to be kind of the bottom.”
Despite the drop in revenue, the company still posted better-than-expected profit, thanks to lower selling, general and administrative expenses. Net income rose 9.2 percent to 3.1 billion yuan, up from 2.8 billion yuan last year. The stock rose 3 percent to $180 in New York.