Baidu quarterly profit rise of 16 percent misses mark

Baidu on Wednesday reported that its quarterly profit climbed 16 percent to $520.4 million, driven by a surge in smartphone users connecting with the Chinese Internet powerhouse.

The Beijing-based firm said revenue in the final three months of last year totalled $2.264 billion, or 14.05 billion RMB, in a 47.5 percent jump from the same period in 2013.

Revenue from people using mobile devices to connect with Baidu constituted 42 percent of the money taken during the quarter.

Baidu -- sometimes described as the Chinese equivalent of Google because of its dominant position amongst search engines in China -- has also been diversifying into other areas of the tech world, including social media, and last year invested in the ride-sharing application Uber.

Baidu reported that profit for the full year tallied $2.125 billion (13.187 billion RMB) in a 25.3 percent rise from 2013. Revenue for the year totalled $7.906 billion (49.052 billion RMB) in a 53.6 percent increase from 2013.

"2014 was a year of remarkable accomplishment for Baidu," said chief executive Robin Li.

"We've successfully transitioned from a PC-centric to a mobile-first company, positioning us well for the next phase of our mobile opportunity: connecting people with services."

The results fell short of Wall Street's high expectations. Baidu shares, traded on the Nasdaq exchange, fell more than eight percent to $196.43 in after-market trading.

Baidu lays claim to being the leading Chinese language Internet search service but faces competition in China from Alibaba, Tencent and Qihoo 360.

Baidu saw its costs in the final quarter of last year rise slightly more than 89 percent to $568 million (3.524 billion RMB), primarily due to increased spending to win people over to its mobile offerings, according to the earnings report.

Baidu, China's equivalent of Google, announced during the recently ended quarter that it also spent money on a stake in Uber for an undisclosed sum, as the controversial US web-based taxi app seeks to expand into an already crowded market.

Baidu will also link users of its mapping and search functions with Uber drivers, the two companies announced at a ceremony in Beijing. The investment has previously been reported to be as much as $600 million, according to state-run China National Radio.

Uber, which connects riders and local drivers, currently operates in nine cities across China, including the capital Beijing and financial hub Shanghai.