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China search leader Baidu ( BIDU ) reported Q4 revenue late Thursday that beat Wall Street’s expectations, sending Baidu’s stock up by double digits in after-hours action. Riding along with volatile China stocks feeling the impact of a slowing economy at home, Baidu’s U.S. stock is up 58% since late August but down 23% in the past 12 months, after closing Thursday’s regular session at 158.22, down 2.8%. After hours, shares of China Internet giant Alibaba ( BABA ) were up more than 1.5% and shares of China e-commerce giant JD.com ( JD )were up more than 1%. For Q4, Baidu saw revenue rise 33% year over year in local currency to $2.88 billion, or RMB 18.69 billion. Analysts polled by Thomson Reuters had expected RMB 18.54 billion, up 32% in local currency. Baidu posted Q4 EPS excluding the net gain recognized from Baidu’s Oct. 26 exchange of Qunar ( QUNR ) shares with fellow China online travel firm Ctrip ( CTRP ) of RMB 7.61, or $1.18. Analysts polled by Thomson Reuters had expected EPS of RMB 6.62. The company guided Q1 revenue of RMB 15.41 billion to RMB 15.97 billion ($2.379 billion to $2.465 billion). On an apples-to-apples basis, excluding Qunar from Baidu’s financials, the guidance represents a 27.8% to 32.5% year-over-year revenue increase, the company said. But that still missed the analyst consensus estimate for RMB 16.32 billion Baidu-backed Qunar announced its share swap with Ctrip.com, another leading Chinese online travel agency, in October. In the company’s earnings release, Baidu CEO Robin Li called 2015 “a touchstone year for Baidu: We made significant progress in broadening our online marketing platform and further extending our reach into transactions services. Even as China’s overall growth slows, services and domestic consumption are growing.” Company executives were slated to hold a conference call with analysts late Thursday. Baidu’s top revenue vertical markets — retail/e-commerce, local services, financial services, health care and education — “reflect Baidu’s vital role in connecting users with merchants in these growing sectors,” Li said in his statement. For Q1, Baidu is guiding revenue in an amount ranging from RMB 15.41 billion ($2.37 billion) to RMB 15.97 billion ($2.46 billion). That’s up 21.1% to 25.5% year-over-year in RMB. On an apples-to-apples basis, excluding Qunar from Baidu’s financials, the Q1 guidance represents a 27.8% to 32.5% year-over-year increase, Baidu said. As a result of Baidu’s exchange of Qunar shares with Ctrip, Baidu deconsolidated Qunar’s financials after Oct. 26. Online-To-Offline A Baidu Focus In June 2015, Baidu announced it would invest $3.2 billion during the next three years to bolster its lineup of online-to-offline, or O2O, offerings by fortifying group-buying website Nuomi, which Baidu acquired for $160 million in 2014. Baidu has emphasized that big up-front spending to establish its O20 business will pay off because its vast abilities in search will eventually translate to revenue from business commissions. The O2O business model aims to attract customers online and then direct them offline to make purchases at physical stores and to services including health care and food delivery. Earlier this month, Baidu announced that the company has received a nonbinding proposal from two Baidu executives to acquire the company’s fast-growing Qiyi video wing for $2.8 billion. The nonbinding proposal came from CEO Li and from Qiyi CEO Yu Gong, Baidu said. The pair have proposed acquiring all of the outstanding shares of Qiyi owned by Baidu based on an enterprise valuation of U.S. $2.8 billion. Should the deal be approved by a special committee formed by Baidu to review the offer, Qiyi will remain a strategic partner, although it will be independent. Baidu currently owns 80.5% of Qiyi’s total outstanding shares. Scalper1 News
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