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Baidu’s bets on mobile and streaming are paying off

Chinese search giant Baidu is still trying to prove it can turn its business around. Its plan might be working.

The company reported revenue of 28 billion Chinese yuan ($4 billion) for its most recent quarter, beating analyst expectations. That amount is flat compared to the same time last year, but it’s more than 6% higher than Baidu’s previous quarter.

Baidu still lost money — 6.3 billion Chinese yuan ($898 million) — in the quarter. But the company’s performance was enough to boost investor optimism. Baidu’s stock rose more than 4% in after-hours trading Wednesday night in New York.

Investors needed a solid showing this week. Baidu’s shares have dropped 32% so far this year as the company’s main business, online marketing, comes under threat from increased regulation of online content in China, as well as the country’s broader economic slowdown.

To deal with those issues, Baidu is trying to diversify its business. Its latest earnings report suggests the company has something to show for those efforts.

One bright spot has been iQiyi, an online video streaming service that Baidu has a stake in. Revenue for the “Netflix of China” jumped 7% year-over-year to more than $1 billion. Subscribers soared 31% from a year ago to nearly 106 million.

iQiyi went public in the United States last year. The Nasdaq-listed startup competes mainly with Alibaba-owned Youku and Tencent Video, and has started making its own original content.

Baidu’s mobile efforts are also fueling growth. The company began inviting developers last year to create “mini” versions of apps that could run within the company’s main mobile app, and analysts believe they have strong potential for monetization.

Baidu CEO Robin Li told analysts Wednesday night that the company’s marketing efforts and mobile programs are strong, creating a cycle of positive reinforcement.

By expanding Baidu’s offerings, Li said the company can convince publishers and service providers to work more with Baidu platforms. That, in turn, draws in more users. Baidu’s app attracted 189 million daily active users in September, up 25% compared to the same time last year, he added.

Baidu has been working to regain its footing since the spring, when it recorded its first loss since going public 15 years ago.

CNN