Baidu may divest global assets, shift focus to AI
BEIJING: Internet giant Baidu Inc is considering spinning off its international division, as it focuses more on prioritizing artificial intelligence as a growth driver, according to a source familiar with the matter.
Following the closure of its mobile healthcare segment and the sale of its takeout delivery unit earlier this year, analysts said the Beijing-based company is aiming to reposition itself as a leader in artificial intelligence. "Baidu wants to spin off those businesses that have less relevance to its AI strategy. As for the international unit, the company's executives have been in negotiations about detailed issues, such as the price and shareholding structure," said the person on condition of anonymity.
"When it is divested from Baidu, the international unit is very likely to be renamed," the source added. He said many issues need to be discussed, so the results may still be pending by the end of this year. Baidu's international unit has seven offices around the globe. Its products include the mobile ad platform DU Ad Platform, as well as several other mobile applications such as DU Speed Booster and Battery Saver. These international apps have more than 2 billion users in 200 countries and regions worldwide.
"The idea behind this spinning off is to gear up efforts to develop AI, since Baidu lost its luster in the age of mobile internet," said Wang Huie, a senior analyst at Beijing-based internet consultancy Analysys. Baidu did not confirm this information. The tech giant has been consolidating its core resources on AI-enabled business, in order to keep pace with its faster-growing rivals. It announced it would roll out driverless buses next year. In addition, it has expanded its business into voice-assisted products and video-streaming entertainment. Analysts spoke highly of Baidu's strategy to refocus on AI. "It's a wise move. Baidu would stay ahead of the curve in the AI era, because it boasts massive data acquired from its search engine and rich funds." said Wang, adding that Baidu might axe unprofitable non-core segments in the future. But she was skeptical about Baidu's plan to realize the mass production of driverless vehicles by next year. Li Zhi, an analyst with Prestige Securities, said Baidu's concentration on AI would help to shore up its profit margins. The search engine company's profit in the third quarter more than doubled, compared to a year earlier. In the same period, its total revenue rose to 23.49 billion yuan ($3.6 billion) from 18.25 billion yuan.