Search giant Baidu’s shares rally after surprise revenue bump

A Baidu sign is seen during the fourth World Internet Conference in Wuzhen, Zhejiang province, China, December 4, 2017. (REUTERS)
Updated 21 August 2019

Search giant Baidu’s shares rally after surprise revenue bump

  • Baidu CEO Robin Li warned employees in an internal letter on Tuesday that “severe external challenges and a weak macro environment” necessitated changes to the company’s personnel and business strategy

BEIJING: Chinese Internet search giant Baidu Inc. beat quarterly earnings estimates on Monday after signing more people up to its video streaming service, sending its shares higher in a relief rally.
Baidu reported a small 1 percent bump in revenue and a 62 percent drop in net profit for the second quarter, but the result was welcomed by investors who had feared worse amid a slowing Chinese economy and stiff competition from rivals like ByteDance’s TikTok.
Baidu’s earnings update followed reports from Alibaba and JD.com last week, which also beat expectations, showing how some tech giants’ diversification strategies might be helping stave off macroeconomic pressures.
Baidu’s video streaming service iQiyi was a key driver of the revenue bump as it crossed the 100 million subscriber mark in June, although there were some concerns about rising costs at the unit associated with winning and retaining viewers.
Baidu’s total revenue for the three months to the end of June rose to 26.33 billion yuan ($3.7 billion) from 25.97 billion yuan a year earlier, beating a forecast 25.77 billion yuan, according to IBES data from Refinitiv. The online giant earned 10.11 yuan per American depositary share, compared with expectations of 6.12 yuan per ADS.
“It makes sense that Baidu beats the estimates because analysts have lowered their expectations to the minimum,” said Connie Gu, an analyst at BOCOM International, adding the market would need to see better-than-expected results for several consecutive quarters for more sustained confidence.
Baidu’s Nasdaq-listed shares rose over 9 percent in after-hours trading. The stock has plummeted more than 50 percent over the past year.
But there were some red flags at separately listed Netflix-like iQiyi, where shares tumbled by the same magnitude after a 20 percent jump in costs as the company spent more on content to entice subscribers undercut a 15 percent rise in revenue to 7.11 billion yuan.
Baidu, whose search engine dominates the market in China, has been under pressure as factors such as US-China trade tensions and tougher government regulation weighed on key revenue contributors like advertising.

HIGHLIGHTS

• Analysts say Baidu still faces structural challenges.

• CEO tells staff firm is making changes, prepare for pain.

• Baidu still facing fierce competition in online ad business.

Analysts said Baidu faced a longer-term structural problem, especially with the rise of new media platforms seeking to lure away subscribers.
“Competition from recently rising large-traffic platforms is becoming more and more fierce, with advertisers shifting budget to those platforms,” said Natalie Wu, an analyst at China International Capital Corporation.
While Baidu has been expanding into other business lines such as cloud services and mini-programs within its Baidu App, most of its success so far has been at iQiyi. Revenues at its core search-engine business dipped 2 percent during the quarter, while Baidu’s net income more than halved to 2.4 billion yuan.
Baidu CEO Robin Li warned employees in an internal letter on Tuesday that “severe external challenges and a weak macro environment” necessitated changes to the company’s personnel and business strategy.
“These changes will bring pain in phases, but will also bring positive and far-reaching effects, which will allow Baidu to walk on more steadily and for longer,” Baidu’s chief said in the letter seen by Reuters.
The company said that no job cuts were planned when questioned about the personnel restructure.


Tanker off UAE sought by US over Iran sanctions ‘hijacked’

Updated 16 July 2020

Tanker off UAE sought by US over Iran sanctions ‘hijacked’

  • The circumstances of the hijack are still unclear and the boat has been tracked to Iranian waters

DUBAI: An oil tanker sought by the US over allegedly circumventing sanctions on Iran was hijacked on July 5 off the coast of the UAE, a seafarers organization said Wednesday.

Satellite photos showed the vessel in Iranian waters on Tuesday and two of its sailors remained in the Iranian capital.

It wasn’t immediately clear what happened aboard the Dominica-flagged MT Gulf Sky, though its reported hijacking comes after months of tensions between Iran and the US

David Hammond, the CEO of the United Kingdom-based group Human Rights at Sea, said he took a witness statement from the captain of the MT Gulf Sky, confirming the ship had been hijacked.

Hammond said that 26 of the Indian sailors on board had made it back to India, while two remained in Tehran, without elaborating.

“We are delighted to hear that the crew are safe and well, which has been our fundamental concern from the outset,” Hammond told The Associated Press.

Hammond said that he had no other details about the vessel.

TankerTrackers.com, a website tracking the oil trade at sea, said it saw the vessel in satellite photos on Tuesday in Iranian waters off Hormuz Island. 

Hormuz Island, near the port city of Bandar Abbas, is some 190 kilometers (120 miles) north of Khorfakkan, a city on the eastern coast of the United Arab Emirates where the vessel had been for months.

The Emirati government, the US Embassy in Abu Dhabi and the US Navy’s Bahrain-based 5th Fleet did not respond to requests for comment. Iranian state media did not immediately report on the vessel and Iran’s mission to the United Nations did not immediately respond to a request for comment.

In May, the US Justice Department filed criminal charges against two Iranians, accusing them of trying to launder some $12 million to purchase the tanker, at that time named the MT Nautica, through a series of front companies. 

The vessel then took on Iranian oil from Kharg Island to sell abroad, the US government said.

Court documents allege the scheme involved the Quds Force of Iran’s paramilitary Revolutionary Guard, which is its elite expeditionary unit, as well as Iran’s national oil and tanker companies. The two men charged, one of whom also has an Iraqi passport, remain at large.

“Because a US bank froze the funds related to the sale of the vessel, the seller never received payment,” the Justice Department said. “As a result, the seller instituted a civil action in the UAE to recover the vessel.”

That civil action was believed to be still pending, raising questions of how the tanker sailed away from the Emirates after being seized by authorities there.

Data from the MT Gulf Sky’s Automatic Identification System tracker shows it had been turned off around 4:30 a.m. on July 5, according to ship-tracking website MarineTraffic.com. Ships are supposed to keep their AIS trackers on, but Iranian vessels routinely turn theirs off to mask their movements.

Meanwhile, the 28 Indian sailors on board the vessel found themselves stuck on board without pay for months, according to the International Labor Organization. It filed a report saying the vessel and its sailors had been abandoned by its owners since March off Khorfakkan. The ILO did not respond to a request for comment.

As tensions between Iran and the US heated up last year, tankers plying the waters of the Mideast became targets, particularly near the crucial Strait of Hormuz, the Arabian Gulf’s narrow mouth through which 20 percent of all oil passes. Suspected limpet mine attacks the US blamed on Iran targeted several tankers. Iran denied being involved, though it did seize several tankers.