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Why Baidu, Inc. Stock Dropped Today

By Steve Symington – Updated May 18, 2018 at 4:14PM

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A top executive is stepping down from the Chinese internet search leader. Here's what investors need to know.

What happened

Shares of Baidu Inc. (BIDU -0.20%) fell 9.5% on Friday after the Chinese internet search leader announced that its chief operating officer, Qi Lu, is stepping down from his post.

More specifically, Lu says he will no longer serve as COO of Baidu starting in July 2018 "due to personal and family reasons." But he will continue to serve as the vice chairman of Baidu's board of directors.

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So what

Recall that Baidu hired Lu early last year to much fanfare from Microsoft, where he worked as global executive vice president of the American tech giant's applications and services group. In particular, Lu was known as one of the industry's leading experts on artificial intelligence -- an area where Baidu was keen to strengthen its position -- and had since broadly taken over daily operational management at Baidu.

"I am highly optimistic on Baidu's future and will continue to support Baidu, while spending more time with my family in the U.S.," Lu explained. "For my next steps, I plan to work in research and investment areas, to help advance our shared mission to make a complex world simpler through technology."

Baidu CEO Robin Li praised Lu for his work at the company, thanking him for "many positive changes at Baidu" since he joined the company.

"With Baidu's strategy to transform into an AI-first company firmly in place," Li added, "we are well positioned to continue the momentum that we have built in the past year."

Now what

To be sure, it's hard to blame investors for reacting negatively to Lu's decision to step down from his significant managerial duties. But however talented Lu might be, Baidu is about more than just a single employee. And I think investors would do well to focus on its underlying fundamentals, which remain impressive, as well as the fact that -- as Li noted -- its AI-first transformation is already well under way. Viewed through that lens, patient Baidu shareholders should have little reason to worry.

Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Baidu. The Motley Fool has a disclosure policy.

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