source from：ft
https://www.ft.com/content/c8d7a9fe-2bc0-11e7-bc4b-5528796fe35c
Baidu’s shift towards AI starts to bear fruit as profits drop

Jennifer Li to step down as chief financial officer to head capital investment unit



YESTERDAY by: Peter Wells in Hong Kong
Chinese internet group Baidu used its first-quarter earnings statement to talk up its transition towards artificial intelligence as it revealed a drop in profits.

The company also said Jennifer Li was stepping down as chief financial officer and would take on the role of forming Baidu Capital, an investment group, and become its chief executive.

For the three months to March 31, Baidu’s operating profit fell 9.3 per cent to Rmb2bn ($290m), while net income fell 10.6 per cent to Rmb1.78bn.

Baidu’s total revenues in the quarter rose 6.8 per cent compared with the same period a year ago to Rmb16.89bn, with mobile representing 70 per cent of that take, up from 60 per cent a year ago.

As a proportion of total revenue, content costs experienced the biggest jump, rising to 15.6 per cent from 8.7 per cent a year ago, mainly due to the increased cost of content associated with its video streaming service iQiyi.

This week Netflix signed a contract with iQiyi that would see a number of the US company’s popular series such as Stranger Things and Black Mirror — among other dramas, animated series and documentaries — streamed to the Chinese site.

Robin Li, Baidu’s chairman and chief executive, described the company’s performance during the first quarter as “solid” and said its shift toward AI was starting to “bear fruit” across existing platforms.

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“In the quarters ahead, we will intensify our efforts in applying AI to improve existing products and to accelerate the development of AI-enabled new business initiatives,” Qi Lu, Baidu’s vice-chairman said.

During a call with analysts, Ms Li said the sale of the company’s mobile games unit would be finalised by mid-May. Earlier this month the company revealed it would sell Baidu Mobile Game for $173m, a steep discount to the $1.85bn it paid for the company, formerly known as 91 Wireless, in 2013.

Baidu said it expected to generate total revenues of Rmb20.47bn-Rmb20.98bn in the second quarter, representing a year-on-year increase of 12.1-14.9 per cent. The consensus estimate is for revenue of Rmb20.9bn.

Analysts at Jefferies said Baidu’s first-quarter revenues were largely in line with market forecasts, while profit was slightly better than expected.

Baidu shares closed 0.6 per cent higher in New York on Thursday but were down 3.8 per cent during after-hours trading on the Nasdaq.