Baidu profit growth slows to 36 pct in 2012

China's leading search engine provider Baidu Inc reported Tuesday a 36.1 percent growth year-on-year in net profits for the fourth quarter of 2012, the lowest in the past three years, which analysts said should force the company to seek new profitable businesses.

The NASDAQ-listed company made net profits of 2.8 billion yuan ($449 million) during the fourth quarter of fiscal year 2012, 7 percent lower than last quarter, as the company's yearly growth rate in net profits dropped for the third consecutive year, according to Baidu's financial results.

The three-year slowdown means that Baidu should expand beyond its Web search service into promising new fields, since Baidu does not have much room to grow its profits in the domestic search engine sector where it has long held a substantial majority of the market, You Tianyu, an industry analyst with Beijing-based Internet research firm iResearch, told the Global Times Tuesday.

Baidu has launched mobile applications for services such as searching, maps and videos, which did not perform well and contributed little to Baidu's revenues, You said, who also noted major players are all concerned about how to profit from the mobile Internet, which is sucking up more and more traffic.

Wang Xiaochuan, the CEO of Sohu.com Inc's search engine sogou.com, said Monday that the most important thing in mobile Internet is to maintain as many users as possible. Wang predicted that games, not search engines, would be the main way to realize profits from mobile Internet over the next two years.

Wang also noted that Baidu is going through a very hard phase, facing bottlenecks in its major search business and difficulty finding profitable new business over the next three or more years.

Data from iResearch indicated that Baidu accounted for a 79.5 percent share of the Chinese market by revenue in 2012, followed by Google Inc with 15.8 percent and Sogou with 3 percent.

This ranking is expected to change in 2013 with the addition of Qihoo 360 Technologies Co's booming search engine so.360.cn, which just commercialized in January, according to iResearch.

Qihoo's search engine service grew rapidly after entering the sector in August 2012, which greatly worried Baidu, Tao Ran, an industry analyst with Beijing-based financial services information provider imeigu.com, told the Global Times Tuesday.

According to Internet research firm Analysys International, Baidu seized some 75 percent of market share by traffic in July 2012, almost 5 percent of which was swallowed by Qihoo immediately after so.360 was launched.