Baidu CEO says he's confident company will recover from coronavirus impact
The Chinese search giant reported better-than-expected results for the fourth quarter, but CEO Robin Li said there will be near-term impact on China's economy
Baidu chief executive Robin Li has expressed confidence in the ability of business to recover from the outbreak of the coronavirus despite warning that the health crisis will have “undoubted” near-term impact on the overall Chinese economy.
A wide range of industries including travel, real estate, autos, health care and franchising have been “suffering from reduced offline activities,” the billionaire founder said on an earnings call on Friday, as the company reported better-than-expected results for the fourth quarter, with a 6% year-on-year increase in revenue to 28.9 billion yuan (US$4.15 billion).
The Nasdaq-listed Baidu expects sales for the March quarter to be between 21 billion yuan and 22.9 billion yuan, representing a 5% to 13% decline, in part due to the epidemic. Its shares dropped 2.9% at the close on Thursday when the projection fell short of analysts’ average estimate.
The deadly virus forced China into an extended Lunar New Year break, with the epidemic’s epicenter of Wuhan and the rest of Hubei province undergoing a month-long lockdown. Although at least 24 of the country’s 31 provinces and municipalities had told businesses not to open before February 10 at the earliest, most public places including cinemas, shopping malls and schools remain shut.
Telecommuting is still the first choice for more than 60% of companies in major Chinese cities, allowing employees to work remotely from home, statistics from Baidu showed.
Still, with most Chinese limiting travel to the bare minimum and spending more time at home, the impact has been positive for online services, according to Li.
Industries that previously generated a large share of online advertising demand, including travel, real estate, auto, franchising and health care, are expected to continue to under perform in the first quarter, while online gaming, online education and e-commerce will likely be top performers in terms of ad revenue for Baidu.
Li said the recovery could be called a V shape or U shape depending on “different interpretations,” adding that overall ad demand “doesn’t disappear but [is] just postponed.”
“The [search] traffic has increased very dramatically during the epidemic outbreak,” said Li. “Daily search queries for coronavirus exceeded 1 billion during the Chinese New Year as users do fact checking and look for reliable information.”
Baidu has been offering free online health care consultations to help conserve the country’s medical resources while internet users can use Baidu Map to see road traffic flows, find designated hospitals and even monitor where infected people are located, according to Li.
Venkata Naveen, tech analyst at GlobalData, said the ongoing epidemic has again underlined how important emerging technologies are in predicting and combating the spread of infectious diseases.
“With the coronavirus pushing China’s health system into turmoil, the country is deploying tech solutions like never before to overcome its worst crisis in years,” he said.