Baidu Inc (NASDAQ: BIDU) announced its fourth quarter revenue of $2.62 billion, out of which 65% represented mobile revenue, a 2.6% decrease from the same period a year ago. Revenue decline was led by an 8.2% dip in online marketing revenue which was dragged down by a fall in online marketing customers. Operating profit in the fourth quarter stood at $314.7 million, a 38.2% decrease from the prior year corresponding period. As a result, the stock lost over 4.5% this morning (as of 9:39AM EST on Feb 24th, 2017; Source: Google finance)
Net income attributable to Baidu in the fourth quarter of 2016 stood at $594.7 million or $1.64 diluted earnings per share. For full year 2016, revenue rose 11.9% year-over-year to $10.2 billion while operating profit recorded a 13.9% dip to $314.7 million. Net income for the year stood at $1.7 billion or $4.59 diluted earnings per share.
For the month of December 2015, operational highlights of Baidu include Mobile search monthly active users (MAUs) which increased 2% year-over-year while mobile maps MAUs rose 13%. Baidu Wallet activated accounts reached 100 million at the end of December 2016, an increase of 88% year-over-year.
Baidu financials were impacted by a government crackdown on healthcare advertising, however the company believes that this year it will have a turnaround as it is seeking to find growth outside its core ad business. Baidu comments that Artificial Intelligence (AI) is an enormous opportunity that will revolutionize the Internet and traditional industries and it is well positioned to lead the AI wave in China with unique combination of technology, data and talent. During the quarter, the company completed its initiative to ensure that new and existing customers meet its stringent quality requirements.
At the end of December 31, 2016, Baidu had cash, cash equivalents and short-term investments of $12.94 billion, while net operating cash inflow for the fourth quarter of 2016 stood at $1.15 billion. Capital expenditures for the fourth quarter of 2016 stood at $173.0 million.
For the first quarter of 2017, Baidu currently expects to generate total revenues in the range of $2.37billion to $2.45 billion, representing a 4.2% to 7.6% year-over-year increase. The company added that this forecast reflects Baidu’s current and preliminary view, which is subject to change.
On the other hand, post the earnings release, Credit Suisse Group reiterated its Hold rating on Baidu with a price target of $180.00. Meanwhile, based on the current consensus rating the stock has a Hold rating with a consensus target price of $188.90 per share.