Baidu Inc. is considering spinning off its video-streaming service iQiyi for an initial public offering in the United States while increasing investment in its mobile and artificial intelligence, the Wall Street Journal reports.
The investments, along with its plan to exit some non-core businesses, “will sow the seed for Baidu’s future growth in autonomous driving and conversational AI, particularly in the home environment”, the newspaper quoted chief financial officer Herman Yu as saying in a statement on Tuesday.
Last year iQiyi raised US$1.53 billion in a funding round, including a US$300 million investment from Baidu.
Baidu confirmed it has filed preliminary documents for iQiyi’s US share offering. But even if the listing pushes through, Baidu said it intends to remain the controlling shareholder.
IQiyi is China’s leading online-video service, and competes with Alibaba Group Holding Ltd.’s Youku Tudou and Tencent Holdings Ltd.’s Tencent Video, the Journal said. Last year it became the only Chinese service to license shows from US streaming giant Netflix Inc.
Also on Tuesday Baidu reported quarterly profit and revenue that beat analysts’ estimates, powered by strong performances of its search and newsfeed services, Reuters said.
Revenue from the company’s core online marketing – including its search platform and newsfeed – jumped 26.3 percent to 20.4 billion yuan (US$3.22 billion).
Net income attributable to Baidu rose to 4.16 billion yuan in the three months to December, from 4.13 billion yuan a year earlier. Excluding one-time items, the company earned 14.9 yuan per American depositary share.
Total revenue rose 29.3 percent to 23.56 billion yuan.
Analysts on average expected a profit of 13.38 yuan and revenue of 23.05 billion yuan, according to Thomson Reuters.
Baidu forecast first-quarter revenue between 19.86 billion yuan and 20.97 billion yuan, compared with analysts’ average estimate of 21.18 billion yuan.
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