Baidu Inc. is one of the largest Internet providers in the world. After a series of regulatory restrictions, the company had to cleanse its search engine of certain online advertisements which led to a significant drop in publishers. This is why the company failed to achieve its revenue target for the fourth quarter, which should have been higher than the previous economic period.
The biggest search engine in China was recently forced to increased the number of registration requirements for any publisher who wants to advertise through this medium. As a consequence, the increased scrutiny caused a drop in a number of paid ads. The reason behind this alteration was that the government asked for an internet advertising crackdown. Policymakers were appalled by how some medical publishers caused outrage throughout social media.
Nonetheless, the number of sales decreased less than expected in the fourth quarter. The company is confident that the wave of bad news is behind them. The regulatory restrictions led to 18.6% drop in advertisers while the online marketing revenue decreased by 8.2%. The expected revenue target for the present quarter is of $2.47 billion, which is higher than the last one that recorded $2.3 billion.
After a drop of online publishers, the company is redirecting attention to other sources of growth. Thus, for the current quarter, Baidu is going to upgrade news services and video content to the latest trends that involve artificial intelligence as well. The new CEO of the company, Qi Lu, has been managing the search engine for just a month now. Nonetheless, he has great plans to surpass main rivals such as Tencent Holdings Ltd. and Alibaba Group Holding Ltd.
Qi Lu stated that the former quarter had just cleansed the search business. Those clients that remained after the new adjustments still represent a major force and the regulations can no longer harm the company. Moreover, the revenue target can only go up from now on, with the danger out of sight. To prove this point, the shares rose more than 1% during after-hours trading. In light of these recent events, Baidu has to plan the comeback gradually. The revenue for the former year rose 6.3%, which was the slowest pace the company has ever registered.
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