\n
By Liam Mo and Deborah Mary Sophia<\/p>\n
Feb 26 (Reuters) – China’s largest search engine operator Baidu reported a 4% revenue drop for its December quarter on Thursday, \u200cas persistent weakness in its mainstay advertising business offset strong growth in its \u200ccloud business.<\/p>\n
Baidu, like other tech giants in China, has invested heavily in building out its artificial intelligence capabilities, helping \u200bthe tech firm capture enterprise demand as companies increasingly adopt AI to speed up operations and productivity.<\/p>\n
However, the strength in its cloud business was not enough to cushion the blow from declines in its advertising unit – its primary revenue generator \u2014 which has struggled to rebound in a highly \u200ccompetitive ad market.<\/p>\n
Weak consumer demand \u2060and a prolonged property-sector crisis have hobbled China’s economy, denting advertiser spending.<\/p>\n
U.S.-listed shares of Baidu fell more than 4% in early trading, even as \u2060the company rejigged its reporting segments to focus more on its AI-powered businesses and assuage investor concerns around ad market challenges.<\/p>\n
Revenue from Baidu’s core AI-powered business, which includes its cloud unit, AI applications \u200band robotaxi \u200bdivision, exceeded 11 billion yuan ($1.61 billion) in the \u200bfourth quarter and accounted for 43% \u200cof the company’s general business revenue.<\/p>\n
AI has become the “new core of Baidu,” said CEO Robin Li, adding that the company’s cloud services were gaining increasing enterprise recognition while its AI apps, such as the Miaoda vibe-coding platform, have gained traction among users.<\/p>\n
Baidu’s finance chief Henry He said on a post-earnings call that the company would maintain its pace of AI investment, \u200cwhich has totalled more than 100 billion yuan over \u200bthe past three years.<\/p>\n
The company reported total revenue of \u200b32.74 billion yuan for the fourth quarter, \u200bcompared with analysts’ estimate of 32.62 billion yuan, according to data compiled \u200cby LSEG.<\/p>\n
Adjusted earnings per share was 10.62 \u200byuan, compared with analysts’ \u200bestimate of 9.25 yuan.<\/p>\n
Earlier this month, Baidu announced a new $5 billion share repurchase program and its first-ever dividend policy, highlighting increased focus on shareholder returns. The company said \u200bon Thursday it expects to \u200cpay out its first dividend by the end of this year.<\/p>\n
($1 = 6.8395 Chinese \u200byuan renminbi)<\/p>\n
(Reporting by Liam Mo in Beijing and Deborah Sophia in Bengaluru; Editing \u200bby Alan Barona, Mrigank Dhaniwala and Louise Heavens)<\/p>\n<\/p><\/div>\n
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