BEIJING-Sörjande's confidence in China's economy and a regulatory gap in the private sector could spell problems ahead ofrevenue, leaders with…
BEIJING-Sörjande’s confidence in China’s economy and a regulatory gap in the private sector could spell problems ahead of
revenue, leaders with search engine companies warned.
Another sign is that the world’s second largest economy faces the head of a trade line between it and the American Baidu business, whose revenues are driven by Chinese companies in medical, retail and other industries, is a barometer for China’s private sector.
“If any massive slowdown, right now we have said, the confidence level of the private sector, from entrepreneurs, is not so high,” said Baidu CEO Robin Li as analyst when the company reported the third quarter results Tuesday in New York.
“If, let’s say, in the next few months, confidentiality levels change, things will change in a positive direction,” said Li. “But we do not know exactly what’s going to happen.”
For the third quarter ended September 30, Baidu analysts estimated estimates amounted to 28.2 billion yuan, or 4.1
1 billion dollars in revenue, an increase of 27% from the same period last year. The growth is partly driven by an increase in users and in the meantime spent on Baidu’s app, the company said. Analysts demanded by FactSet predicted $ 4.03 billion in revenue.
The quarterly net profit was 12.4 billion yuan, an increase of 56% the year before.
But Baidu said revenue growth is likely to slow down for the rest of the year. It predicts fourth quarter revenue to grow by 15% to 20% compared with the same period last year compared with the 27% increase that occurred during July-September.
Baidu US certificates increased by 0.9% to $ 183.37 on Tuesday, and fell 0.75% in the after-trade after the results were released. Shares are down 20% so far so far, similar to other Chinese technology giants.
Mr. Li said that the current period may remind some people in the global financial crisis a decade ago, he looks different. “Right now, it’s more about traditional industry, more about entrepreneurial confidence, and it can change very quickly,” he said. “In the longer term, I am still very optimistic about Baidu and China’s future.”
China’s economic expansion has slowed to its weakest rate since the financial crisis. An official activity surveyor in China’s manufacturing sector hit more than two years low in October.
Raymond Feng, an analyst with Pacific Epok research firm in Shanghai, said that the macroeconomic impact already weighs on China’s overall advertising market, online advertising is somewhat safer than traditional ads.
Given the macroeconomic slowdown and new competitors, including new online video platforms, Baidu is likely to face tougher competition in online advertising, he says.
Another factor that can curb the company’s profit is the Chinese government’s tightening of regulations in various sectors, “said Baidu’s chief financial officer Herman Yu.
Politics affecting sectors such as video games, real estate, financial services and online trading could beat customers who advertise on Baidus platforms, Yu said in the income statement. While Baidu is not dependent on any particular advertising industry, he said, the cumulative effect of several industries, “a little here and there, added together to make sure we’re not getting as fast as we’d like before.”
In the video game industry, regulators have not approved the sale of new titles since March, when a government reorganization began. Uncertainties remain about the authority that will regulate the industry.
-Micah Maidenberg in New York contributed to this article.
Write to Yoko Kubota at [email protected]