During their last public earnings call in July, Baidu CFO Xinzhe Li said the company would have to “basically double down” on investment in O2O if they were to stay competitive in the market.
They’ve certainly made a financial commitment, slashing into their last quarter earnings with multiple billions US invested in O2O platforms including group buying site Nuomi. It now seems they are making a management commitment too.
The Chinese search giant has appointed former Uber CFO, Brent Callinicos, to its board of directors. Callinicos will join Yang Yuanqing, Chairman of Lenovo as the two newest board members of Baidu, while former Sony Chairman Nobuyuki Idei and Netdragon Websoft Chairman Liu Deijian will vacate their seats on the board.
As Chairman of Lenovo, the world’s biggest PC maker, Yang Yuanqing will be a valuable asset, despite the fact that Lenovo has also stumbled in recent times, slashing 10% percent of their white collar workforce. Baidu will be looking to leverage both Yang and Callinicos’ fresh perspective on business to help them diversify in an increasingly mobile market.
It’s a time of challenge and transition within Baidu, which is seeing a drop off in traditional search traffic, forcing the company to search other revenue streams. Currently, the company still earns most of its revenue from search, while the penetration rates of their O2O services are still lingering in the “low singe digits”, according to Xinzhe Li this July.
“Because of the early-stage nature, we have to invest aggressively to make sure we will be successful,” she said at the time. ““Eventually, we will be able to take a cut… whether that’s three years or five years, it’s really hard to tell at this point.”
Despite last-quarter growth slumping to 3.3%, Baidu has made no attempt to pump the breaks on spending. The company was confirmed as a participant in Uber China’s $1.2 billion USD funding round. It’s a project that has pitted them against the other two primary Chinese internet giants, Alibaba and Tencent, both of whom are backers of Didi Kuaidi, the country’s most popular ride-hailing app.
Baidu has also led funding in the $40 million USD B series of health O2O startup Quyi, as well as a $100 million USD B series of O2O laundry startup Edaixi. All capping off its $3 billion USD investment in group buying site Nuomi.
The aggressive O2O investment has seen the company’s stock stumble however, and the company is trying to claw back revenue by opening up a handful of companies for investment, including 91 Desktop and Baidu Takeaway.