Baidu profit edges up 1.3 per cent on higher costs for building mobile business

BEIJING, China – Baidu Inc., which operates China’s most popular search engine, said Wednesday quarterly profit rose 1.3 per cent as it invested to expand its fledgling mobile business.

The Beijing-based company earned 3 billion ($498 million) in the three months ended Sept. 30. Revenue rose 42.3 per cent to 8.9 billion yuan ($1.4 billion) but sales and administrative costs more than doubled, due mostly to mobile-related expenses. Development costs rose 77.5 per cent.

Established Internet services such as Baidu are scrambling to develop wireless platforms as Web surfers shift to going online via smartphones and tablets.

In July, Baidu announced it would acquire a smartphone apps distributor, 91 Wireless, for $1.9 billion.

“We will continue to invest aggressively in order to position ourselves well in this rapidly developing mobile market,” said Baidu’s chief financial officer, Jennifer Li, in a statement.

China’s population of Internet users grew 10 per cent over the past year to 591 million people as of the end of June. The number of users who surf the Web on wireless devices rose at double that rate, climbing 20 per cent to 464 million.

Baidu’s latest profit growth was below the double-digit rates of previous year but represented a rebound from the previous quarter’s rare 4.5 per cent contraction in earnings.

Baidu dominates traditional Internet search with nearly 80 per cent of China’s market. But in mobile, it faces tough competition from companies such as Qihoo 360, which launched a rival in mid-2012.

Baidu also has expanded from search into music downloads, online video and other services.