Thu, Feb 15, 2018 - Page 10 News List

Baidu plans IPO of Netflix-style platform in US


Baidu Inc (百度) plans to list its Netflix-like video streaming service iQiyi (愛奇藝) on a US exchange amid rising content costs as China’s biggest search engine posted fourth-quarter sales that topped analyst estimates.

Baidu submitted draft registration documents to the US Securities and Exchange Commission although the proposed number of US depositary shares in the initial public offering (IPO) has not been determined, the company said in a statement on Tuesday.

The Beijing-based company expects to remain the controlling shareholder after the IPO of the business, which analysts have valued at about US$15 billion.

A listing would give iQiyi much-needed financial power as Baidu faces off against Tencent Holdings Ltd (騰訊) and Alibaba Group Holding Ltd (阿里巴巴) in a hugely expensive streaming video market.

Content costs last year soared 82 percent to US$2.06 billion and Baidu chief financial officer Herman Yu (余正鈞) said it would likely climb at the same pace this year, suggesting a rise to almost US$4 billion.

While costly, video is vital to keeping users hooked and generating advertisement sales.

Baidu’s fourth-quarter revenue hit 23.6 billion yuan (US$3.62 billion) in the three months that ended in December last year, helped by its newsfeed product and search advertising. That compares with the 23.1 billion yuan average of analyst estimates.

Net income attributable to Baidu was 4.2 billion yuan, compared with the 3.97 billion yuan that analysts predicted.

The company forecast sales of 19.9 billion to 21 billion yuan for this quarter, slightly missing the 21.2 billion yuan expected by analysts.

The long-mooted move to list iQiyi is one way the company can shed costly business units to focus on what it sees as its core strength: products driven by artificial intelligence.

However, unlike many of Baidu’s other side businesses, data from QuestMobile and Jefferies show that iQiyi is a market leader, making up 33 percent of China’s online video market when broken down by monthly time spent in December last year.

“It’s not profitable yet, but we lost a lot less than the competition,” Baidu chief executive officer Robin Li (李彥宏) told investors on the earnings call.

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