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Baidu’s Revenue Climbs 13% After Cloud Sales Offset Ad Slowdown

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(Bloomberg) -- Baidu Inc. reported a 13% jump in sales after growth in newer businesses such as the cloud helped offset a slowdown in its main internet advertising division.

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Revenue for the September quarter rose to 31.9 billion yuan ($5 billion), in line with the 31.8 billion yuan average of estimates. That was buoyed by a 73% leap in AI cloud revenue, the company said. Baidu predicted sales of 31 billion yuan to 34 billion yuan for this quarter. It reported a net loss of 16.6 billion yuan, after marking down investments to the tune of 18.9 billion yuan.

Beijing’s year-long campaign to rein in large internet corporations has ensnared industries from education to entertainment and insurance, weakening the prospects for Baidu’s bread-and-butter online marketing business. China’s search leader, meanwhile, is plowing billions into areas from unmanned vehicles to the cloud and chips, heeding Beijing’s call to become self-sufficient in key technologies. Billionaire founder Robin Li has pledged to grow non-marketing revenue to more than half of total sales in the next three years.Unlike Tencent Holdings Ltd. and Alibaba Group Holding Ltd., Baidu isn’t a major target of China’s big tech crackdown, which is centered on rooting out market monopolies. Regulators are said to be considering asking social media companies to let rivals access and display their content in search results, Bloomberg News reported last month, a move that could benefit Baidu by further eradicating online barriers.But Chinese censors have trained their sights on online entertainment, capping salaries for stars and banning the production of idol variety shows. Baidu’s Netflix-style offshoot iQiyi Inc., which is said to be seeking a second listing in Hong Kong, could suffer from regulatory uncertainties as well as intensifying competition with video platforms run by ByteDance Ltd. and Kuaishou Technology. On Wednesday, iQiyi projected a lower-than-expected revenue of 7.08 billion yuan to 7.53 billion yuan for the three months ending December.“With tightened scrutiny on long-form video content with a focus on value orientation and cast’s moral standing, the release of many key titles of IQ could potentially be delayed or cancelled,” Nomura analysts led by Thomas Shen wrote in a note last month. “This could weigh on IQ’s subscriber and top-line growth.”In November 2020, Baidu proposed an acquisition of Joyy Inc.’s popular YY live-streaming platform for $3.6 billion as a way to broaden its content. But antitrust regulators have yet to approve the deal, which Reuters said in September was unlikely.Longer run, Baidu is hoping to monetize its AI technologies in use cases like smart transportation and electric vehicles. Its venture with carmaker Geely is readying for mass-production in 2023, and the company has rolled out driverless ride-hailing services in cities like Guangzhou and Beijing.

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