From Investors Business Daily:
Baidu (BIDU) stock fell sharply in late trading after the Chinese search engine giant cut its Q2 revenue forecast....MORE
Baidu now sees Q2 sales of $2.807 billion-$2.823 billion vs. its prior forecast for $3.119 billion-$3.192 billion. Analysts had expected just over $3 billion.
Baidu fell nearly 7% to 152.80 in after-hours action. Alibaba (BABA) fell fractionally in late trading. Alibaba closed down 0.6% to 75.45.
Baidu faced public outrage and regulatory probes after the death of a college student who accused Baidu of leading him to a false cancer treatment. Baidu has tried to address the problem with changes to its paid search program, with promote paid content above other listing results.
Baidu said in its revenue warning:
“The revenue guidance revision was mainly attributable to the following factors:
First, regulatory authorities continue to review the online marketing practices of medical, pharmaceutical, healthcare and other similar businesses, and have also implemented stricter advertising regulations for medical organizations. The review is being rolled out with varied timing with different levels of implementation and interpretation across geographies. While the review is underway, the Company has observed a reduction or delay in spend from a significant portion of medical customers. These customers may be in the process of receiving instruction from regulatory authorities, gathering and submitting required documentation and adjusting their practices to comply with new regulations....