Baidu announces management shift and share buyback amid first quarterly loss since 2005

Its old business is slowing and its new business is costly.

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Baidu announced that Xiang Hailong, the company’s senior vice president of its search business, would resign after serving the company for 14 years. The statement was made on Thursday when the company disclosed that it made a net loss of RMB 327 million (USD 49 million) in the first quarter of this year, compared to a net income of RMB 6.7 billion in the first quarter of 2018. The company, which went public in 2005, has been profitable until this quarter.

Baidu has renamed its search business as “mobile business,” and has promoted Shen Dou to replace Xiang in overseeing this segment. Prior to this assignment, Dou served as vice president of Baidu’s mobile products, leading the development of the Baidu App, Haokan short video app, and Baidu’s mini-programs.

Behind this move is Baidu’s hope to catch up in the mobile era, though the wager is costly, especially when the company’s revenues are shrinking.

In the first quarter of this year, Baidu earned RMB 24.1 billion in revenue, up 15% year-on-year. Its total revenue for 2018 was RMB 102.3 billion, increasing 28% year-on-year.

The company said it expects revenue for the second quarter of 2019 to fall between RMB 25.1 billion and RMB 26.6 billion, representing a drop by up to 3% year-on-year.

Baidu App’s daily active users in March 2019 reached 174 million, growing 28% year-on-year. Its short video app Haokan’s daily active users in that month reached 22 million, growing by a whopping 768% year-on-year.

However, CFO Herman Yu said that “margins were dampened by our successful CCTV New Year Eve Gala marketing campaign, which accelerated the traffic of Baidu family of apps and highlighted better in-app search user experience.”

Baidu also said in its first quarter financial report that its board of directors had authorized a new share repurchase program, under which the company may repurchase up to USD 1 billion of its shares, effective until July 1, 2020.

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