Baidu's Aggressive Reinvestment Strategy

Apple launches its brand-new iPad Air on Friday, but plenty of consumers are anxiously awaiting the arrival of the iPad Mini with Retina display. The smaller tablet might be hard to come by this holiday shopping season, but starting Friday The Motley Fool will be hosting a contest to win a free iPad Mini with Retina display! Make sure to check back on Friday to find out how you can win!

Shares of Baidu  (NASDAQ: BIDU  ) closed with healthy gains today after the Chinese search giant put up envious top-line growth last quarter -- revenue was up 42% to $1.5 billion. Most of those gains didn't make it to the bottom line, though, as both operating and net profit only increased by a little over 1%. That's because Baidu sees the market moving toward mobile, and is likewise investing in the future. Baidu has made multiple acquisitions this year, mostly related to its mobile ambitions. Meanwhile, mobile monetization continues to steadily improve.

Internet penetration and smartphone adoption are still in the early stages in China, underscoring Baidu's continued opportunities. Baidu is also planning to expand into Thailand, Egypt, and Brazil, but will leave the U.S. market to Google. Taking a short-term hit to invest in future growth is absolutely the right move here, considering that mobile is here to stay. Baidu also expects fourth-quarter sales to also grow over 45% from a year prior to more than $1.5 billion.

In this segment of Tech Teardown, Erin Kennedy discusses Baidu's earnings report with Evan Niu, CFA, our tech and telecom bureau chief.

Want to get in on the mobile phenomenon?
Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access The Motley Fool's latest free report: "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2706292, ~/Articles/ArticleHandler.aspx, 10/23/2014 4:52:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement