Divergent Quarters For Chinese IT Billionaires As Gaming Trumps Search
Two of China's leading Nasdaq-listed IT companies reported fourth-quarter results this week, offering a window into online profits at the end of a tougher year. Baidu, the search-engine giant, posted another strong rise in revenues and profits, but missed analysts' forecasts and took a pummelling on Wall Street. Shares are off by 12% this week, a sharp correction after a buoyant January. As my colleague Russell Flannery notes, a 10% drop in the stock is equivalent to $875 million of Baidu founder Robin Li's $8.1 billion fortune. Baidu's fourth-quarter revenues hit a record $1 billion, up 42%, but earnings per share didn't keep pace, rising 36%. More broadly, investors are worried that Baidu's margins are suffering as it focuses on mobile search, while some also see a threat from virus-software firm Qihoo, which launched its own search engine last year. Li, China's second-richest tycoon, has argued that Baidu is well placed to make a transition to mobile search and incorporate other services for mobile users, such as cloud-based storage.