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Investing.com — ADRs in Baidu (NASDAQ:BIDU) jumped in premarket trading on Wednesday after the Chinese search engine giant announced a new $5 billion stock buyback and forecast better times ahead in 2023.
“In 2023, we believe we have a clear path to reaccelerate our revenue growth, and we are now well positioned to make use of the opportunities that China’s economic recovery offers us,” Co-founder and Chief Executive Robin Li said in a statement.
The move underscores the greater confidence in China’s technology sector after a string of announcements indicating that the Chinese Communist Party’s campaign to crack down on the growing power of Internet platform companies has effectively ended.
By 05:40 ET (10:40 GMT), Baidu ADRs were up 7.0% in response.
Baidu said at the same time that the cost savings it had implemented during the pandemic had started to bear fruit, with underlying operating profit rising 14% from a year earlier in the second half. Lower personnel costs after a mass round of layoffs reduced selling, general and administrative expenses by 9%.
Even so, underlying earnings per ADR fell to CNY 11.60 ($1=CNY 6.8954) from CNY 16.87 in the previous quarter, as the pandemic continued to weigh on its core business. Revenue of CNY 33.8B was roughly flat from a year earlier.
Baidu said earlier this month that it expects to complete testing of a new enhanced AI product that some see as a rival to the ChatGPT tool backed by Microsoft (NASDAQ:MSFT). Li said that the company is “poised to capitalize on the imminent inflection point in AI, unlocking exciting new opportunities across our entire business portfolio – from mobile ecosystem to AI Cloud, autonomous driving, smart devices, and beyond.”
Baidu’s core online marketing business is expected to rebound significantly this year as the lifting of mobility restrictions allows it to source revenue from a broader base of vendors and advertisers. The company’s autonomous driving venture is also making headway, having secured its first license from regulators to test vehicles with no driver or safety operator in the car. Apollo Go, Baidu’s autonomous ride-hailing service, provided 561,000 rides in the fourth quarter, up 162% on the year.
