Chinese search engine Baidu Inc. reported a loss in the third quarter because of a write-down on its investment in a travel company.
The company posted a net loss of 6.4 billion ($892 million) in the three months ended Sept. 30, compared with a profit of 12.4 billion yuan the year earlier. The result included a noncash impairment loss of 8.9 billion yuan on its equity investment in Trip.com Group Ltd., a Shanghai-based provider of travel services.
Baidu said the investment experienced an “other-than-temporary” decline in valuation. The company decreased its holding in Trip.com from 19% to 12% in October, Baidu said.
Revenue for the quarter totaled 28.1 billion yuan, slightly down from the year earlier, but better than Wall Street’s estimates, despite a strong boost from online video streaming service iQiyi Inc.
IQiyi contributed 7.6 billion yuan of revenue in the quarter, a 34% rise from a year ago. IQiyi subscribers reached 105.8 million in September 2019, increasing 31% year-over-year.
For the fourth quarter, Baidu said it expects revenues to be between 27.1 billion yuan and 28.7 billion yuan, representing a decrease of 1% to an increase of 6% over last year, assuming its core searching revenue will grow between 0% and 6%, the company said.
IQiyi reported a third-quarter loss of 3.7 billion yuan, wider than a net loss of 3.1 billion yuan in the same period last year, but beating analysts’ estimates. Revenue rose 7% from the year-ago quarter. The company projected fourth-quarter revenue of 6.86 billion yuan to 7.2 billion yuan, representing a decrease of 2% to an increase of 4% from a year ago.
Both stocks surged in after-hours trading. Baidu’s shares jumped more than 4% and iQiyi’s shares climbed 3.55%.
Contact reporter Denise Jia (email@example.com)